Vi promoters infusing Rs 4,500 crore equity. This is more of a symbolic infusion.

Vodafone Idea (Vi) has announced the following –

  • The promoters – Vodafone and Aditya Birla Group are together infusing Rs 4,500 crore into the Company.
  • Shares will be issued at Rs 13.30/ share. Market price before announcement was Rs 11.10/ share.
  • Vodafone Group and the Birlas currently hold 44.3 per cent and 27.7 per cent stake respectively in Vi.
  • Last week, Vodafone Group raised around Rs 1,442 crore by selling an unidentified investor a 2.4% stake in Indus Towers via a block deal. Additionally, it entered into an agreement with Bharti Airtel, who will acquire a 4.7% stake in Indus Towers from Vodafone Group on the condition that the company will use the proceeds to invest in Vodafone Idea and clear its pending dues with Indus Towers.
  • The subject fund infusion by Vodafone should meet this requirement.

Along with the above fund infusion, board has also approved raising additional Rs 10,000 crore as a mix of equity and debt from third parties. No further details are disclosed on this additional fund raise wrt the timelines, interested parties etc.

My personal view on the transaction –

  • Fund infusion by promoters is more symbolic and doesn’t move the needle much.
  • Vi’s gross debt, excluding lease liabilities but including interest, increased to Rs 1.99 trillion for the quarter ended 31 December, comprising deferred spectrum payment obligations of ₹1.1 trillion, adjusted gross revenue (AGR) liability of Rs 64,620 crore due to the government and debt from banks and financial institutions of ₹23,060 crore.
  • Besides it needs funds for telecom infrastructure upgrade and 5G bidding.
  • Company needs a complete capital restructuring, waive offs and most importantly a strategic investor with deep pockets. Aditya Birla Group and Vodafone seem to be just carrying along.
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