In one of the biggest fund-raising plans in the corporate sector, Vodafone Idea has proposed to raise Rs 25,000 crore through a rights issue in a move aimed at consolidating its position and taking on Reliance Jio Infocomm.
Based on the recommendations of the company’s capital raising committee, Vodafone said the board of the company “considered and approved the offer and issue of fully paid-up and/ or partly-paid up equity shares and/ or other securities convertible into equity shares of the company, including but not limited to, compulsorily convertible debentures, for an amount aggregating up to Rs 25,000 crore, by way of a rights issue to existing eligible equity shareholders of the company”.
The promoter shareholders — Vodafone group and Aditya Birla group — have re-iterated to the board that they intend to contribute up to Rs 11,000 crore and up to Rs 7,250 crore respectively as part of such rights issue, the company said in a stock exchange filing.
“Further, the promoter shareholders have indicated that in case the rights issue is undersubscribed, each of the promoter shareholders reserves the right to subscribe to part or whole amount of the unsubscribed portion, subject to applicable law,” the company said.
“For the purposes of giving effect to the rights issue, the board has authorised the capital raising committee to decide the terms and conditions of the rights issue, including the instrument, issue price, rights entitlement ratio, record date, timing of the rights issue and other related matters,” it said. Vodafone has a debt of around Rs 1,26,000 crore.
For the promoters of the company, this will be the second fund raising plan to cut the debt. Earlier, Vodafone and Aditya Birla group infused close to Rs 14,140 crore in their respective telecom operations to lower debt for the merger to go through. The companies started combined operations from September 1, 2018.
Vodafone Idea is currently India’s leading telecom service provider with over 422 million customers and revenue market share of 32.2 per cent (Q1 of FY19). However, it had posted a loss of Rs 5,006 crore on a revenue of Rs 7,638 crore for the quarter ended September 2018.
On the other hand, RIL’s telecom unit Reliance Jio notched up a fifth consecutive profitable quarter with the net profit rising 64.88 per cent at Rs 831 crore as against Rs 504 crore a year ago. Jio’s standalone revenue from operations was at Rs 10,383 crore as against Rs 6,879 crore, a rise of 50.93 per cent on a year-on-year basis. “The Jio family is now 280 million strong and growing on one of the world’s largest mobile data networks,” Jio had said last week.
Vodafone Idea shares closed 0.90 per cent higher at Rs 33.75 on the BSE on Tuesday, valuing the company at Rs 29,481 crore.
Meanwhile, on reports about Bharti Infratel and Indus Towers seeking money from Vodafone Idea as exit penalty, Vodafone said, “we wish to clarify that the prior to the merger of Vodafone Indian entities with the company, both the company and Vodafone entities were having tenancies on the same tower of various infrastructure service providers, including Indus Towers Ltd and Bharti lnfratel Ltd. Post the merger, these two tenancies on a single tower have been converted to a single tenancy with a higher loading as per the terms of the Master Service Agreement. Both Bharti Infratel and Indus have raised demands for exit charges on the company on account of this change and for which the company is in negotiation with them.”
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