Govt nod for Voda Idea proposal for up to Rs 15,000 crore FDI investment

The government has approved a proposal from (Vi) for an investment of up to Rs 15,000 crore via the foreign direct investment (FDI) route, a person familiar with the matter said. The struggling telco’s stock rose over 6% on the news.

The person added that the government’s nod is an enabling approval and no fund-raising deal has been sealed yet.

“When the fund-raising announcement was made, the Board said that the maximum capital to be raised from one source was Rs 15,000 crore and therefore, approval for that had to be sought,” said the person.

In a statement on September,2020 Vi said “ the Board of Directors of the Company........approved the raising of funds though: (a) issue of equity shares or securities convertible into equity shares, Global Depository Receipts, American Depository Receipts, foreign currency convertible bonds, convertible debentures, warrants, composite issue of non-convertible debentures and warrants entitling the warrant holder(s) to apply for equity shares or a combination thereof up to an aggregate amount of Rs. 15,000 crore by way a public issue, preferential allotment, private placement, qualified institutions placement or through any other permissible mode in one or more tranches; and (b) issuance of unsecured and / or secured, non-convertible debentures up to an aggregate amount of Rs. 15,000 crore, by way of public offering or private placement basis or otherwise, in one or more tranches," said the company in a regulatory statement on regulatory exchange.

In afternoon trade on Thursday, the telco's stock was up 2% at Rs9.18 on the BSE.

The fund raise will help Vi to pay statutory dues, invest in its operations and pay for spectrum it recently bought.

Vi posted a net loss for the fiscal fourth quarter widened to Rs 6985.1 crore from Rs 4540.8 crore in the previous three-month period, hurt by an exceptional loss, even as the absence of interconnection usage charge (IUC) dragged revenue for the mobile phone operator which again warned of risks to its viability.

There exists material uncertainty relating to the company’s ability to continue as a going concern which is dependent on its ability to raise additional funds as required, successful negotiations with lenders on continued support, refinancing of debts, monetisation of certain assets....," India’s only loss-making private operator had then said.