Vodafone Idea announces ₹18,000 cr FPO; fixes price band, lot size, dates

The cash-strapped telecom operator Vodafone Idea's board has approved a resolution for a public offering of its equity shares worth ₹18,000 crore of face value ₹10 each, according to an exchange filing.

Vodafone Idea Ltd, in a statement to the stock exchanges, says: "The company's board passed a resolution for approving, adopting and filing of the red herring prospectus dated 11 April 2024 (the “RHP”) with the Registrar of Companies, Gujarat at Ahmedabad, in connection with the further public offering of Equity Shares, aggregating up to ₹18,000 crore."

The development came after the telco’s shareholders approved ₹20,000 crore fundraising plan via a combination of equity and equity-linked instruments on April 3, 2023. The company has said through a combination of equity and debt, it aims to raise a total of ₹45,000 crore.

The bid offer will open on April 18, 2024, while it will close on April 22, 2024. Reports say the company has also finalised anchor investors, but Vi says the anchor investor bid or offer period will be April 16, 2024.

Further, the capital raising committee of the company today also approved and recommended the floor price of the offer to be ₹10 per equity share. The board also approved the cap price at ₹11 per share, with a minimum bid lot of 1,298 equity shares and in the multiples thereafter. "The Capital Raising Committee in its meeting held today i.e. April 12, 2024, approved the price band for the FPO issuance. The higher end of the price band i.e. Rs. 11 is at a discount of ~26% compared to the recently approved preferential issue price to the promoter entity at Rs. 14.87 and a discount of ~15% compared to the last closing price of Rs. 12.95," says Vi.

Vodafone Idea says it will participate in road shows and interact with investors or analysts in cities across India from the week starting from 15 April 2024 up to the bid closing date.

Amid the development, Vodafone Idea share is trading down 2.32% at ₹12.63 on the BSE today. In Q3 FY24, telecom major saw its net loss narrowing to ₹6,985 crore vs ₹7,990 crore loss in the same period last year. The average revenue per user (ARPU) rose 7.5% year-on-year to ₹145 from ₹135 in Q3 FY23.

Notably, Vi’s funding plan had been pending for a long time. Its promoters had earlier infused ₹4,500 crore (in Mar’22) to settle dues with Indus Tower and fulfil non-convertible debentures (NCD) repayment commitments. The government had also converted the interest related to the four-year moratorium on deferred spectrum and AGR liability into equity.

The company still holds a debt of ₹2,10,000 crore, with an annual instalment of ₹43,000 crore from FY26 onwards. “This looks challenging against FY24 EBITDA (IND-AS 116) of ₹8,400 crore,” said brokerage Motilal Oswal in its February report, adding that the capex directed toward the rollout of 4G and 5G holds significant importance. It said the much-awaited capital raise is crucial, as it is essential to ensure “immediate liquidity and facilitate the expansion of the network”.