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.
Airtel has informed that it will acquire the above mentioned 4.7% of Indus Towers from Vodafone group at Rs 2,388 crore.
Vi has again confirmed to close the Rs 10,000 crore external fund raise shortly. No further details have been provided.
The Company is speculated to be in talks with the US-based PE firms like Apollo Global.
Vodafone Group Plc is infusing additional Rs 436 crore into the Company @ Rs 10.20/ share, via equity shares or warrants.