Vodafone Idea FPO: Vi raises ₹5,400 cr from 74 anchor investors

Vodafone Idea Ltd has raised ₹5,400 crore via anchor book allocation ahead of the further public offer of its equity shares (“FPO”) opening to the public investors. These investors include GQG Partners, The Master Trust Bank of Japan, UBS, and Morgan Stanley Investment Management, among others.

The third largest telecommunications service provider in subscribers, in an exchange filing today, says its capital raising committee approved the allocation of 490,90,90,908 equity shares to the anchor investors. "The anchor book received interest from a large number of leading global as well as domestic investors, all at the top end of the price band, i.e. ₹11 per equity share."

A total of 74 anchor investors participated in the anchor book, raising ₹5,399 crore for the company. Out of the total allocation of shares, 79,51,84,654 (i.e. 16.20 % of the total allocation to Anchor investors) were allocated to 5 domestic mutual funds via a total of 11 schemes, raising ₹8,74,70,31,194 crore for the company.

The cash-strapped Aditya Birla Group and Vodafone Group company are launching the FPO of Vodafone Idea Ltd, for which the bids will open on April 18, 2024, and will close on April 22, 2024.

The floor price of the offer is ₹10 per equity share, and the board has approved the cap price at ₹11 per share, with a minimum bid lot of 1,298 equity shares and in the multiples thereafter.

The higher end of the price band i.e. ₹11 is at a discount of ~26% compared to the recently approved preferential issue price to the promoter entity at ₹14.87, says Vi.

Shares of the company dropped 1.82% during the intra-day trade to ₹12.92 on the BSE on Wednesday, with its m-cap at ₹62,894.33 crore.

With the current FPO, the company intends to purchase equipment for expanding the network infrastructure by setting up new 4G sites, expanding the capacity of existing 4G sites and new 4G sites, and setting up new 5G sites. Additionally, it aims to pay certain deferred payments for spectrum to the DoT and the GST with additional funds and also use them for general corporate purposes.

Notably, Vi’s funding plan had been pending for a long time. Its equity raising is expected to boost capex and enable the rollout of 5G services. Beyond that, the company also faces a financial crunch in FY26 CL when annual spectrum and AGR payments of $4 billion per annum will fall due, unless the government converts debt principal to equity at the end of the moratorium. "We retain SELL on VIdea with a ₹5.00 TP. Falling subs add risks to our forecasts and also with pending AGR case relief," brokerage major CLSA said in its April 10 report.

The latest data from telecom regulator TRAI reveal Vodafone Idea (VIdea) reported a loss of 1m subscribers to 221m in Feb-24 and a 17m loss over the past 12M.

In Q3 FY24, the 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.

The total equity share capital of the company stands at 5,012 crore shares (pre-offer), with promoter holdings at 40.06% and promoter group holdings at 8.69%. The company's public shareholders stand at 2,560 crore. Post-offer, after the offering of 16,36,36,36,363 shares, the total number of equity share capital will increase to 6,648 crore, with the promoter holding down to 30.30% and the promoter holding at 6.57%.