Vodafone Idea’s board of directors has given the green light to a significant move, approving the allotment of shares valued at ₹2,075 crore to Oriana Investments Pte. Ltd., a key entity within the Aditya Birla Group. Priced at ₹14.87 per share, this preferential allotment demonstrates confidence in the company’s growth prospects, notably exceeding the Friday closing price of ₹13.36 on the BSE.
In a parallel development, the board has also sanctioned a notable increase in the company’s authorized share capital, now expanded to ₹1 trillion. This adjustment, with ₹95,000 crore allocated to share capital and ₹5,000 crore to preference share capital, reflects Vodafone Idea’s proactive approach to fortifying its financial framework. This revised capital structure represents a substantial uptick from the previous ₹75,000 crore authorization, signaling the company’s strategic intent to bolster its capital base.
To formalize these resolutions, an Extraordinary General Meeting (EGM) is slated for 8th May, as communicated in the company’s statement to the exchanges on Saturday. This forthcoming EGM serves as a pivotal forum where shareholder consensus will be sought, solidifying the company’s strategic directives.
This board approval swiftly follows Vodafone Idea’s recent shareholder endorsement for the issuance of securities totaling around ₹20,000 crore. With preparations underway for a follow-on public offer (FPO), expected to hit the market as soon as next week, Vodafone Idea is poised to attract substantial capital infusion. Leading financial institutions, including Axis Bank, Jefferies Group, and State Bank of India, have been entrusted as lead bankers, underlining the company’s strategic partnerships in its financial pursuits. Following the FPO, Vodafone Idea aims to further bolster its financial position by accessing increased debt from banking institutions, ensuring a robust financial trajectory for the future.
In February, shareholders greenlit a crucial ₹45,000-crore fundraising initiative, encompassing a ₹20,000-crore equity infusion from existing investors, with participation from current promoters as previously indicated by the company. Following this equity drive, Vodafone Idea is set to explore debt avenues, aiming to secure a total funding sum of up to ₹45,000 crore. The completion of this fundraising endeavor is anticipated by the end of June.
This capital raise holds immense significance for the company’s 5G aspirations, particularly as it stands as the only major telecom operator yet to introduce consumer-end 5G services. While rivals Reliance Jio and Bharti Airtel forged ahead with nationwide 5G deployments last year, Vodafone Idea faces the imperative to swiftly adapt in this pivotal technological landscape.
Struggling with financial constraints and grappling with a staggering ₹2.1 trillion debt burden alongside declining subscriber figures, the cash-strapped mobile services provider trails behind industry peers. January witnessed a notable decline of 1.5 million users—a rise from the 1.4 million subscribers lost in December 2023—bringing Vodafone Idea’s total subscriber base to 221.5 million as of January. Moreover, the company’s average revenue per user remains the lowest among the top three carriers, stagnant at ₹145 per user per month, further underscoring its ongoing financial challenges.