Vodafone Idea, jointly promoted by Vodafone Group and the Aditya Birla Group, will raise Rs 436.21 crore from its UK parent company at Rs. 10.20 per unit, as the cash-strapped telecom operator aims to clear out all the cash it can to invest in its network and prepare for the upcoming spectrum auctions.
In a filing with the Bombay Stock Exchange, the loss-making telco said its board had approved the fundraising “through issuance of: (a) up to 42,76,56,421 shares with a par value of Rs. 10/- each; or ( b) up to 42.76.56.421 Warrants convertible into Shares, to Euro Pacific Securities Ltd. (a Vodafone Group entity and promoter of the Company), on a preferential basis”.
In the event that the funds are raised by allotment of shares, the issue price will be Rs. 10.20 per share share (including premium of Re. 0.20 per share share).
In the case of warrants, the issue price will be Rs 10.20 and 100% of the issue price will be prepaid at the time of subscription of the warrants. Each warrant would be convertible into 1 treasury share and the rights attached to warrants could be exercised at any time, within a period of 18 months from the date of allotment.
Vodafone Idea shares rose 0.71% to close out the day’s trading at Rs 8.53. The announcement came after market hours.
The board of directors also approved the convening of an extraordinary general meeting on Friday, July 15, 2022 to seek shareholder approval for the aforementioned preferred issue.
Earlier this week, the telco had announced that it plans to raise up to Rs 500 crore from its UK promoter.
In February and March, the Vodafone Group had sold a 7.1% stake in Indus Towers – 2.4% through a block deal and 4.7% to Bharti Airtel – raising about Rs 3,831 crore. Out of this, it invested Rs 3,375 crore in Vodafone Idea by subscribing to newly issued shares. The proceeds were used by Vodafone Idea to partially settle outstanding payments to Indus Towers.
Vodafone Group’s new fund infusion is expected to come from the balance of proceeds from its Indus Towers stake, analysts say. Vodafone Idea has so far raised a total of Rs 4,500 crore through the issuance of new equity with the rest coming from the Indian promoter.
In a filing with the Bombay Stock Exchange late Sunday night, the loss-making company, jointly promoted by British telecoms giant Vodafone, and Aditya Birla Group said its board will meet on June 22 (Wednesday).
The debt-laden telco urgently needs money to invest in its network and to participate in the upcoming spectrum auctions at the end of July. In addition to the funds from promoters, the loss-making telco plans to raise another Rs 10,000 crore in equity from an outside investor and settle debts of a similar amount from its lenders.
But the process is stuck until the government converts the company’s interest on the accrued dues into 33% equity. The conversion and equity offering is expected to be completed shortly.
Vodafone Idea had chosen to defer payment of its adjusted gross revenues (AGR) and spectrum to the government for four years, as part of a government support package for the telecom industry. The telco has also opted to convert the interest accrued on the deferred dues into equity, representing a 33% stake in the company. This will make the government the largest shareholder, but the promoters – Britain’s Vodafone Plc and India’s Aditya Birla Group – will jointly hold 50% of the company.