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.