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Vodafone Idea raises Rs 436 cr from Vodafone Group

Vodafone Idea, jointly promoted by Vodafone Group and Aditya Birla Group, will raise Rs.436.21 crore from the UK parent company at Rs. 10.20 per unit, as the cash-strapped telecom operator aims to mop up as much money as possible to invest in its network and prepare for upcoming spectrum auctions.

In a filing to the Bombay Stock Exchange, the loss-making telco company said its board of directors agreed to raise funds “by issuing: (a) up to 42,76,56,421 shares of share capital with a nominal value of Rs. 10/- each; or (b) up to 42,76,56,421 collateral convertible into equity shares, in favor of Euro Pacific Securities Ltd. (Vodafone Group Entity and Company Promoter), on a preferential basis.”

In case of raising funds by allotment of equity shares, the issue price will be Rs. 10.20 per share of share capital (including a premium of Re. 0.20 per share of share capital).

In the case of warrants, the issue price will be Rs 10.20 and 100% of the issue price will be paid in advance at the time of subscription of the guarantees. Each note will be convertible into one share of share capital and the rights attached to the warrants can be exercised at any time, within a period of 18 months from the date of grant.

Vodafone Idea shares rose 0.71% to end the trading day at Rs 8.53. This announcement came after market hours.

The Board of Directors also agreed to call an extraordinary general meeting for Friday, July 15, 2022, to obtain shareholder approval for the aforementioned preferred issue.

Earlier this week, the telecom operator announced that it intends to raise up to Rs 500 crore from its UK promoter.

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In February and March, Vodafone Group sold a 7.1% stake in Indus Towers, 2.4% through a block deal and 4.7% to Bharti Airtel, raising around Rs 3,831 crore. Of this, he invested Rs 3,375 crore in Vodafone Idea by subscribing to the newly issued shares. The funds were used by Vodafone Idea to partially settle payments to Indus Towers.

Analysts say the new injection of money to Vodafone Group is expected to come from the balance of proceeds from its stake in Indus Towers. So far, Vodafone Idea has raised a total of Rs 4.5 billion by issuing new shares, the rest coming from the Indian promoter.

The debt-laden telco desperately needs cash to invest in its network, as well as to participate in the upcoming spectrum auctions at the end of July. In addition to money from promoters, the money-losing telecom company plans to raise another Rs10,000 crore in equity from an external investor and take on debt of a similar amount from its lenders.

But the process was halted until the government transferred the company's interest on accumulated fees to 33% of equity. It is expected that the process of transferring and issuing shares will be completed soon.

Vodafone Idea has opted to defer paying its Adjusted Gross revenue (AGR) and spectrum dues to the government for four years, as part of a government aid package for the telecom industry. The telecommunications company also chose to convert the interest accrued on the deferred installments into government capital, which is equivalent to 33% of the company's shares. This would make the government the largest shareholder, but the promoters, UK-based Vodafone Plc and India's Aditya Birla Group, would collectively own 50% of the company.

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