Voda Idea announces Rs 18,000 cr FPO; offer opens on Apr 18

Voda Idea announces Rs 18,000 cr FPO; offer opens on Apr 18

Struggling telecom operator Vodafone Idea on Friday said it plans to raise up to Rs 18,000 crore through share sale in the biggest follow-on public offer as it scrambles to mobilize resources to stay afloat.

Voda-Idea shares will be issued, under the FPO, in a price band of Rs 10-11 apiece against Friday's closing price of Rs 12.96 on the BSE.

The share sale will open on April 18 and close on April 22, Vodafone Idea, the country's third-largest telecom carrier, said in a stock exchange filing.

This will be the largest FPO after the previous best of Rs 15,000 crore share sale by Yes Bank in 2020.

VIL's blockbuster fundraising -- which comes close on the heels of a Rs 2,075 crore capital infusion by Aditya Birla group via a preferential share issue earlier this month -- would give the ailing telco the ammo to improve its positioning in the Indian telecom market, where it currently trails larger rivals like Reliance Jio and Bharti Airtel by a wide margin.

The funds would also help VIL shore up finances for the much-delayed 5G rollout, strengthening 4G services, and clearing vendor dues.

VIL has been haemorrhaging subscribers month after month and fighting a pitched battle for survival, saddled with debt of Rs 2.1 lakh crore and quarterly losses.

According to a BSE filing on Friday, VIL's follow-on offer will open on April 18 and close on April 22.

''The Board of Directors of the company, at its meeting held on April 11, 2024, approved Further Public Offering (FPO) of equity shares, aggregating up to Rs 18,000 crore. The capital raising committee in its meeting held today that is April 12, 2024, approved the price band for the FPO issuance,'' the company said in a BSE filing.

Vodafone Idea shares, however, tanked in early trade on Friday, following the announcement of the Rs 18,000 crore FPO. It closed the day at Rs 12.96 apiece, a tad higher than the previous close.

The floor price for the mega offer has been set at Rs 10 and the cap at Rs 11 per equity share.

The higher end of the price band (Rs 11) is at a discount of about 26 per cent compared to the recently approved preferential issue price to the promoter entity at Rs 14.87 and a discount of about 15 per cent compared to the last closing price of Rs 12.96.

A minimum bid lot will be 1,298 equity shares and in the multiples of 1,298 equity shares, thereafter, the company said.

A back-of-the-envelope calculation shows that at the upper end of the price band, the minimum application amount would add up to Rs 14,278 for a single lot of shares. ''... Pursuant to the approval accorded by the Board of Directors of the company at its meeting held on February 27, 2024, and the special resolution passed by the members of the company on April 2, 2024, the Board has, at its meeting held today that is on April 11 2024...passed resolution for approving, adopting and filing of the red herring prospectus dated April 11, 2024, with the Registrar of Companies, Gujarat at Ahmedabad, in connection with the further public offering of equity shares, aggregating up to Rs 18,000 crore,'' VIL said.

VIL said it will be participating in road shows and interacting with investors and analysts in various cities across India from the week of April 15, 2024, up to the bid closing day.

The board has also fixed the anchor investor bid/offer period to be April 16, 2024.

The recent preferential issue of VIL has been a precursor of sorts to this mega fundraising plan by the crisis-ridden telco.

On April 6, Vodafone Idea board approved raising Rs 2,075 crore from promoter Aditya Birla Group and increasing its authorised share capital to Rs 1 lakh crore.

The Vodafone Idea board had approved issuance of up to 1,395,427,034 equity shares of face value of Rs 10 each at an issue price of Rs 14.87 per equity share (including a premium of Rs 4.87 per equity share), aggregating to Rs 2,075 crore to Oriana Investments Pte Ltd (Aditya Birla Group entity forming part of the promoter group), on a preferential basis.

The company's shareholders green-signalled raising up to Rs 20,000 crore by issuance of securities in an extraordinary general meeting (EGM) held on April 2.

Earlier this year, Vodafone Idea had outlined plans to raise Rs 45,000 crore through a mix of equity and debt as it looked to match services offered by rivals Reliance Jio and Bharti Airtel and arrest an alarming and prolonged subscriber churn.

According to Trai's data, Vodafone Idea continued to bleed on the subscriber front. VIL lost 15.2 lakh wireless subscribers, plunging its mobile subscriber base to 22.15 crore in January in sharp contrast to subscriber gains by Jio and Airtel.

Citi, in a note, said the completion of the planned Rs 45,000 crore fundraising should enable VIL to ramp up network capex and narrow the gap with peers on 4G coverage and 5G rollouts. ''Combined with potential tariff hikes after elections and the possibility of AGR relief (matter pending in Supreme Court), this should significantly boost VIL’s cash flow position,'' the brokerage report said.

VIL, however, may still face a cash shortfall from 2H FY26 (second half of FY26) once the ongoing moratorium on the government's AGR and spectrum repayments ends, unless the government exercises the option to convert these dues into equity, it said, adding that this remains a key uncertainty from both a cash flow and an equity dilution perspective.

''Nonetheless, we are enthused by progress on the fundraise and believe this should drive further upside for Indus Towers,'' Citi said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)