Vodafone Idea shares fall 4% ahead of ₹18,000-cr FPO

Shares of Vodafone Idea plunged as much as 4.5% to hit an intra-day low of ₹12.60 apiece on the BSE on Tuesday, ahead of its ₹18,000 crore follow-on offering (FPO) on April 18. 

The scrip opened lower at ₹12.90, down 1.97% against the previous closing price of ₹13.16. At 10:48 am, the share price of the company was trading 4.03% lower at ₹12.63. This was in line with the broader BSE Sensex, which was trading 354.53 points or 0.48% lower at 73,096.94. The company’s market capitalisation stood at ₹61,531.21 crore, with more than 14.33 crore shares exchanging hands on the BSE against the two-week average of 1124.13 lakh shares. The share price of the telecom operator touched a 52-week high of ₹18.42 on January 1 this year, whereas the company hit a 52-week low of ₹6.01 on April 18 last year.

In the past six months and one year, the company has given 7.61% and 108.87%, in returns, respectively. Touted to be the country’s largest, Vodafone-Idea's ₹18,000 crore FPO is reportedly attracting a host of foreign institutional investors and domestic institutional investors. As per reports, foreign institutional investors such as Rajiv Jain-led GQG Partners, Fidelity, and domestic institutional investors such as HDFC Mutual Fund, and Motilal Oswal Mutual Fund amongst others are looking to participate in the mega FPO.

Notably, the beleaguered telecom operator, which is aiming to turn around its tide after a string of losses over the past quarters and a declining subscriber base amongst other financial woes, plans to use ₹12,750 crore from the FPO to purchase equipment to expand its 4G and 5G network as well as existing capacities.

The bid offer will open for subscription on April 18, 2024, and close on April 22, 2024. The cash-strapped telecom company has fixed the price band at ₹10-11 per share. “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 ₹14.87 and a discount of ~15% compared to the last closing price of ₹12.95," the telecom operator says in a regulatory filing last week.

Earlier this month, the shareholders of the telecom operator approved ₹20,000 crore fundraising plan via a combination of equity and equity-linked instruments. It also aims to raise ₹45,000 crore through a combination of equity and debt. In the October to December quarter of FY24, the telcos losses narrowed to ₹6,985 crore vs ₹7,990 crore loss in the same period last year. The company’s average revenue per user (ARPU) also increased 7.5% year-on-year to ₹145 from ₹135 in the December quarter.