Vodafone to raise Rs.14,500 to spruce up capital

For a long time, Vodafone India has been sorely in need of capital buffers to spruce up its balance sheet. Now the board approval for the fund raising is in place. The board of Vodafone Idea has approved the proposal to raise funds up to Rs.14,500 crore (or approximately over $2 billion) through a mix of debt and equity and in multiple tranches over a period of time. Funds are likely to be raised both, in India and globally.

The above sum of Rs.14,500 crore capital raising will include Rs.4,500 crore from the promoter entities. It is well known that the major promoter entities of the company are Vodafone Group PLC and Aditya Birla Group. The board has approved the issue of up to 338 crore equity shares at an issue price of Rs.13.30 per share aggregating to Rs.4,500 crore to promoters on preferential basis. The balance Rs.10,000 crore will be raised from the market.

This issue of 338 crore shares will happen at a premium of 10% to the floor price of Rs.12.08. The shares will be issued to Euro Pacific Securities Ltd and Prime Metals Ltd both of which are entities affiliated to the Vodafone Group PLC. In addition, these preferential shares will also be issued to Oriana Investments Pte Ltd, a unit of the Aditya Birla Group. This was disclosed by the company as part of its exchange filings. 

The Rs.10,000 crore, other than the promoter preferential placement, will be raised through the issue of equity shares or securities convertible into equity shares, Global Depository Receipts, American Depository Receipts, foreign currency convertible bonds (FCCB), Non-convertible debentures (NCDs), warrants etc. These will add up to Rs.10,000 crore in all and will be issued in multiple tranches. An EGM will be convened on 26th March.

The news was well received by the markets as is evident from the fact that the shares of Vodafone Idea surged 6% to Rs.11.08 on the BSE on Thursday, despite the markets being extremely slippery. Vodafone Idea has already rallied 16% during the period. In addition, the positive cues also come from the fact that Bharti Airtel has acquired an additional 4.7% in Indus Towers from Vodafone Group. 

The big challenge for Vodafone Idea still remains its quarterly and annual numbers. For the Dec-21 quarter, Vodafone idea had reported consolidated net loss of Rs.7,231 crore in as against a net loss of Rs.4,532 crore in the third quarter last year. Revenue for the quarter at Rs.9,720 crore was up 3.3% on a sequential basis. This revenue surge was aided by several tariff interventions including the recent Nov-21 tariff hikes taken by all operators.

For a long time, Vodafone India has been sorely in need of capital buffers to spruce up its balance sheet. Now the board approval for the fund raising is in place. The board of Vodafone Idea has approved the proposal to raise funds up to Rs.14,500 crore (or approximately over $2 billion) through a mix of debt and equity and in multiple tranches over a period of time. Funds are likely to be raised both, in India and globally.

The above sum of Rs.14,500 crore capital raising will include Rs.4,500 crore from the promoter entities. It is well known that the major promoter entities of the company are Vodafone Group PLC and Aditya Birla Group. The board has approved the issue of up to 338 crore equity shares at an issue price of Rs.13.30 per share aggregating to Rs.4,500 crore to promoters on preferential basis. The balance Rs.10,000 crore will be raised from the market.

This issue of 338 crore shares will happen at a premium of 10% to the floor price of Rs.12.08. The shares will be issued to Euro Pacific Securities Ltd and Prime Metals Ltd both of which are entities affiliated to the Vodafone Group PLC. In addition, these preferential shares will also be issued to Oriana Investments Pte Ltd, a unit of the Aditya Birla Group. This was disclosed by the company as part of its exchange filings.

The Rs.10,000 crore, other than the promoter preferential placement, will be raised through the issue of equity shares or securities convertible into equity shares, Global Depository Receipts, American Depository Receipts, foreign currency convertible bonds (FCCB), Non-convertible debentures (NCDs), warrants etc. These will add up to Rs.10,000 crore in all and will be issued in multiple tranches. An EGM will be convened on 26th March.

The news was well received by the markets as is evident from the fact that the shares of Vodafone Idea surged 6% to Rs.11.08 on the BSE on Thursday, despite the markets being extremely slippery. Vodafone Idea has already rallied 16% during the period. In addition, the positive cues also come from the fact that Bharti Airtel has acquired an additional 4.7% in Indus Towers from Vodafone Group.

The big challenge for Vodafone Idea still remains its quarterly and annual numbers. For the Dec-21 quarter, Vodafone idea had reported consolidated net loss of Rs.7,231 crore in as against a net loss of Rs.4,532 crore in the third quarter last year. Revenue for the quarter at Rs.9,720 crore was up 3.3% on a sequential basis. This revenue surge was aided by several tariff interventions including the recent Nov-21 tariff hikes taken by all operators.