Vodafone Idea Allots ₹2,075 cr Shares to Group Entity
Vodafone Idea, one of India’s leading telecom operators, has recently made significant decisions aimed at bolstering its financial position and preparing for future growth. The company’s board approved the allotment of shares worth ₹2,075 crore to Oriana Investments Pte. Ltd, a part of the Aditya Birla Group and a member of the promoter group. These shares were issued on a preferential basis at an issue price of ₹14.87 per share, which represented a premium compared to the closing price of ₹13.36 on the BSE the previous Friday.
Additionally, the board also gave the green light to an increase in the company’s authorized share capital to ₹1 trillion. This expansion includes dividing the capital into ₹95,000 crore of share capital and ₹5,000 crore of preference share capital, up from the existing ₹75,000 crore, divided similarly. These decisions were communicated to the exchanges in a statement, and an Extraordinary General Meeting (EGM) is scheduled for May 8 to seek approval for these resolutions.
These moves come on the heels of Vodafone Idea’s shareholders’ recent approval of a ₹20,000 crore fundraising initiative. The company is reportedly planning to raise this capital through a follow-on public offer (FPO), with Axis Bank, Jefferies Group, and State Bank of India serving as lead bankers. Following the equity infusion, Vodafone Idea intends to raise additional debt, bringing the total funding amount to potentially ₹45,000 crore. The fundraising process is expected to conclude by the end of June.
This financial infusion is crucial for Vodafone Idea’s ambitions, particularly regarding the rollout of 5G services. Unlike its competitors, Reliance Jio and Bharti Airtel, Vodafone Idea has yet to introduce 5G services to consumers. The company’s financial challenges include a significant debt burden of ₹2.1 trillion and a declining subscriber base.
According to data from the Telecom Regulatory Authority of India (Trai), Vodafone Idea lost 1.5 million subscribers in January, following a loss of 1.4 million subscribers in December 2023. As of January, its total subscriber base stood at 221.5 million. Furthermore, the company’s average revenue per user (ARPU), a key metric for telecom profitability, remains the lowest among the top three carriers at ₹145 per user per month.
With these fundraising initiatives and capital allocation decisions, Vodafone Idea aims to address its financial challenges, enhance its operational capabilities, and compete more effectively in India’s fiercely competitive telecom market. The successful implementation of these strategies will be crucial for the company’s long-term sustainability and its ability to capitalize on emerging opportunities in India’s rapidly evolving telecommunications landscape.
