Aditya Birla Group to infuse ₹2075 crore in Vodafone Idea; telecom stock reacts

The board of cash-strapped Vodafone Idea (Vi) has approved a proposal to raise ₹2,075 crore from promoter Aditya Birla Group. The development came days after the telco’s shareholders approved a ₹20,000 crore fundraising plan through a combination of equity and equity-linked instruments.

Following this announcement, Vodafone Idea shares gained as much as 5% in opening trade to ₹13.99 against the previous closing price of ₹13.32 on the BSE. The telecom stock, however, soon lost momentum and fell 6.6% from day’s high to ₹13.06 levels, while the market capitalisation slipped to ₹64,060 crore.

Shares of Vodafone Idea touched its 52-week high of ₹18.42 on January 1, 2024, and a 52-week low of ₹6.01 April 18, 2023. In the last one year, the share price has risen 113%, while it rose 20% in six months. In the calendar year 2024, the telco has lost over 22%, whereas it fell over 4% in a month.

In an exchange filing on April 6, Vodafone Idea said that its board has approved issuance of up to 1,395,427,034 equity shares of face value of ₹10 each at an issue price of ₹14.87 per equity share (including a premium of ₹4.87 per equity share), aggregating to ₹2,075 crore to Oriana Investments Pte Limited, on a preferential basis.

Oriana Investments is an entity under the Aditya Birla Group, which is a promoter of the telecom company. The group owns 10.59% stake in Vodafone Idea.

“The board also approved an increase in authorised share capital of the company from existing ₹75,000 crore (divided into ₹70,000 crore equity share capital and ₹5,000 crore preference share capital) to ₹1,00,000 crore (divided into ₹95,000 crore equity share capital and ₹5,000 crore preference share capital).

The filing also notes the board also approved convening of an extraordinary general meeting of the company on May 8, 2024, to approve the above matters.

Last week, Vi on April 3 conducted an extraordinary general meeting with shareholders seeking approval for the fundraising proposal. The company in an exchange filing said that a “special resolution” for the issuance of securities worth ₹20,000 crore was favoured by the number of voting members.

The shareholder approval comes following Vi board’s nod for the ₹20,000 crore fundraising plan on February 28, 2024. The board had authorised the management to appoint various intermediaries, including bankers and counsels to execute the fundraising. Besides, Vi is also looking at raising around ₹15-20,000 crore via a follow-on issue, for which the board had given approval in February. The company says through a combination of equity and debt, it aims to raise around ₹45,000 crore. 

The telecom company recently said that it remained “actively engaged” with its lenders for tying up the debt funding, which will follow the equity fundraising. The equity and debt fundraising will enable the company to make investments towards significant expansion of 4G coverage, 5G network rollout and capacity expansion. According to Vi, these investments will enable it to improve its competitive positioning and offer an even better customer experience. 

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