Vodafone Idea gains on board plan to weigh raising Rs 2,075 crore from promoters

Shares of Vodafone Idea gained over 3 percent on April 4, a day after the telecom operator informed exchanges that its board will later this week consider issuing equity or convertible securities of Rs 2,075 crore on a preferential basis to one or more promoter group entities.

Earlier in February, the debt-laden company's board had approved raising Rs 20,000 crore through equity-linked instruments. This proposal received the shareholders' approval on April 3.

According to Vodafone Idea's regulatory filing, 97.65 percent public institutions and 98.62 percent non-public institutions voted in favour of the fundraising exercise.

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The funds will allow the telecom major to expand its 4G network and roll out 5G services. Analysts suggest that these moves could help the company regain some of its competitive edge by offering a better experience to users.

The Vodafone Idea fundraising could materialise with a follow-on public offer (FPO) in a week or two, CNBC Awaaz reported a day earlier, citing sources.

The company is looking to raise around Rs 15,000-20,000 crore from the FPO, and the board had given its approval in February, as it looks to infuse capital to finance the much-delayed 5G rollout and to strengthen its 4G services.

Moneycontrol had reported on March 1 that Vodafone Idea was in talks with investment banks to strike an efficient fundraising structure, one that would optimise various avenues, including rights issue, preferential allotment, or a follow-on public offering.

Without adequate funding, it is possible that the telecom player could lose the customer base, and hence the intense market focus on the development, as it looks to boost average revenue per user (ARPU).

Analysts suggest that these moves could help Vodafone Idea regain some of its competitive edge by offering a better experience to its users. However, they said the fundraise is too small to have a meaningful impact on the company's market share and its overall debt position.

The board has approved only a part of the initial amount of Rs 45,000 crore planned by the company.

On April 3, Vodafone Idea shares closed 1.1 percent higher at Rs 13.60 on the National Stock Exchange (NSE). In the last one year, the stock has risen over 100 percent. Year-to-date, however, the scrip is down 20 percent.

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