Vodafone Idea to launch ₹18,000 crore FPO at ₹10-11 price band

The offer, slated for 18-22 April, will open for anchor investors on 16 April, India’s third largest telecom service provider said in a notice to BSE.

The higher end of the price band of ₹11 is at a discount of about 26% compared to the recently approved preferential issue price to promoter entity Oriana Investments Pte. Ltd, at ₹14.87 per share, and a discount of about 15% compared to Thursday’s closing price of ₹12.95 per share.

A minimum bid lot of 1,298 shares will have to be made by investors and in the multiples of 1,298 shares thereafter.

Vodafone Idea will begin road shows and interact with investors, and analysts in various cities across India from the week starting 15 April till the bid closing date.

Mint reported last week that the Aditya Birla Group promoted telco will raise the money from the markets through an FPO at a discounted price band, and had appointed Axis Bank, Jeffries Group and State Bank of India as lead bankers for managing the share sale.

 The fundraise through the FPO will culminate many attempts made by the loss-making telecom services provider that had first announced its intention to raise capital back in September 2020.

Vodafone Idea’s shareholders approved a ₹45,000-crore fundraising initiative, including the ₹20,000-crore equity-based capital infusion from existing investors. 

On Saturday, the telco approved allotting shares worth ₹2,075 crore to Oriana Investments on a preferential basis. It also increased the authorised share capital of the company to ₹1 trillion, split into ₹95,000 crore share capital and ₹5,000 crore preference share capital. This is an increase from the existing ₹75,000 crores, divided into ₹70,000 crore share capital and ₹5,000 crore preference share capital.

Following the equity fundraise, Vodafone Idea will look to raise debt, taking the total amount of funding to up to ₹45,000 crore. It is expected to complete the fundraise by the end of June.

In a capital-intensive and cut-throat telecom sector, a lack of funding for three years has created several challenges for the carrier, including a persistent erosion in subscriber base and revenue.

The company is saddled with a ₹2.1 trillion debt, and has not been able to pay a large portion of dues to its vendors, which, as per industry estimates, amounts to as much as ₹10,000 crore. Its larger rivals Bharti Airtel and Reliance Jio have stolen a march over it in rolling out 5G services in the country.

Vodafone Idea’s shares declined more than 4% during early trade on Friday despite the news of the fundraise. The shares scaled a 52-week high of ₹18.40 on 23 February on the NSE, but have been on a downtrend since then.

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Published: 12 Apr 2024, 09:33 AM IST