Hot Pursuit     14-Jun-24
Vodafone Idea board OKs raising upto Rs 2,458 cr via preferential issue
Vodafone Idea (VIL) announced that its board has approved preferential allotment of around 166 crore fully paid up equity shares in one or more tranches for an aggregating consideration of upto Rs 2,458 crore on preferential basis.
The company will allot approximately 166 crore equity shares to its vendors, Nokia Solutions and Networks India Private (Nokia) and Ericsson India Private (Ericsson) at an issue price of Rs 14.80 per share, (including a premium of Rs 4.80 per share).

The company will allot upto 1,02,70,27,024 equity shares at an issue price of Rs 14.80 per share (including a premium of Rs 4.80 per equity share), aggregating to Rs 1,520 crore to Nokia. While the firm will allot upto 63,37,83,780 equity shares at an issue price of Rs. 14.80 per equity share (including a premium of Rs. 4.80 per equity share), aggregating to Rs 938 crore to Ericsson.

Nokia and Ericsson both have a long-term partnership with VIL, as key suppliers of network equipment, and this preferential allotment will enable VIL to clear part of their outstanding dues. It further bolsters VIL’s capex rollout for building a top quality 4G & 5G network to contribute towards India’s digital transformation.

This preferential allotment price is higher by 35% to the FPO price and comes with a lock in of 6 months. Nokia and Ericsson will participate for up to Rs 1,520 crore and Rs 938 crore respectively, subject to approval by VIL shareholders at the EGM to be held on 10 July 2024.

This comprehensive fund raise (equity and debt) will empower the company to work towards executing its well-defined strategy including expansion of its 4G coverage and launch of 5G services. This will enable VIL to participate in the large and significant opportunities offered by the Indian wireless sector.

The company, with a strong subscriber base of 212.6 million (March 31, 2024), 4G population coverage of over 1 billion Indians, competitive spectrum profile, extensive distribution reach and a well-established brand along with differentiated digital offerings is well positioned to effectively compete in the market.

Post this preferential issuance, the shareholding of Nokia and Ericsson in the company will be 1.5% and 0.9% respectively. The Promoter (ABG and Vodafone) shareholding will stand at 37.3% and shareholding of Government of India will stand at 23.2%, while the balance 37.1% will be public shareholding, stated by the company.

Akshaya Moondra, CEO, Vodafone Idea, said “VIL is all set to participate in the industry growth with right investments to expand its 4G coverage and offer 5G experience to its customers while remaining focused on its execution capabilities. As VIL embarks on its growth journey, support from key stakeholders is critical and the agreement with Nokia and Ericsson reaffirms these vendors as long-term partners of the company and sets the stage for the next phase of our growth.”

Vodafone Idea is an Aditya Birla Group and Vodafone Group partnership. It is amongst India's leading telecom service provider. The company provides pan India voice and data services across 2G, 3G and 4G platforms. The company holds large spectrum portfolio including mid band 5G spectrum in 17 circles and mmWave 5G spectrum in 16 circles.

The telecom service provider’s consolidated net loss widened to Rs 7,674.6 crore in Q4 FY24 as compared with Rs 6,418.9 crore in Q4 FY23. Revenue from operations increased marginally to Rs 10,606.8 crore in Q4 FY24 as against Rs 10,531.9 crore posted in Q4 FY23.

The scrip rose 0.31% to Rs 16.12 on the BSE.

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