Vodafone Idea, one of India’s major telecom companies, announced that its Rs 18,000-crore follow-on public offer (FPO) will open for subscription on April 18. The FPO is part of the company’s efforts to raise up to Rs 20,000 crore via equity, as approved by its board on February 27.
The FPO, which was first reported by Moneycontrol on April 10, is one of the largest offerings of its kind in India. It aims to bolster the company’s financial position and reduce its substantial debt.
The offer will close on April 22, giving potential investors a narrow window to subscribe. Additionally, the anchor bids will be approved on April 16, according to an exchange filing by the company.
Vodafone Idea has set the floor price for the issue at Rs 10 per share, while the cap price is set at Rs 11 per share. The company has enlisted Jefferies, SBI Caps, and Axis Capital as lead managers for the FPO.
The telecom provider’s decision to pursue the FPO comes as it faces significant financial challenges. Raising these funds through the public offering is expected to support the company in navigating its debt burden and strengthening its operational and financial stability.
The company recently raised Rs 2,075 crore through a preferential share issue to Oriana Investments Pte Ltd, one of its promoter entities and part of the Aditya Birla Group. The shares were issued at Rs 14.87 per share, which is a 40% premium over the FPO floor price.
In addition to the equity fundraise, Vodafone Idea is in talks with banks to secure debt funding, which could bring the total funds raised to Rs 45,000 crore through a combination of equity and debt.
However, brokerage CLSA has warned that Vodafone Idea shares may fall to Rs 5 due to the company’s loss of 17 million subscribers over the past 12 months. The brokerage also highlighted concerns about the company’s future financial obligations, including substantial annual spectrum and AGR payments worth up to $4 billion due in fiscal year 2026.
Despite these challenges, Vodafone Idea’s shares have doubled over the last year. However, the stock has recently seen a correction, falling 30% from its recent peak. On April 12, Vodafone Idea shares were trading 2% lower at Rs 12.65 on the National Stock Exchange.
During the session on April 12, the stock was in the F&O ban, indicating that no new positions could be created in the stock.
The telecom operator faces significant hurdles, including potential financial strain as it looks towards capex and 5G rollout, as well as possible restructuring or government intervention in its debt obligations.
Disclaimer: The information provided by Bystox regarding stock market activity is intended for informational purposes only and should not be interpreted as investment advice. Readers are strongly advised to seek guidance from a qualified financial advisor prior to making any investment decisions.