The board of Vodafone Idea (Vi) on Tuesday approved fundraising of up to ₹20,000 crore via a combination of equity and equity-linked instruments.

Reacting to the development, shares of the telecom operator sank 12% to ₹13.60 on the National Stock Exchange (NSE).

The board has also authorised the management to appoint various intermediaries, including bankers and counsels to execute the fundraising.

The company will call for a meeting of its shareholders on April 2, 2024, and after shareholder approval, it expects to complete the equity fundraise in the coming quarter.

The promoters will also participate in the proposed equity raise.

The telecom company says it remains actively engaged with its lenders for tying up the debt funding, which will follow the equity fundraise. Through a combination of equity and debt, the company plans to raise around ₹45,000 crore. Vodafone Idea's bank debt currently stands at less than ₹4,500 crore.

The equity and debt fundraising will enable the company to make investments towards significant expansion of 4G coverage, 5G network rollout and capacity expansion, Vodafone Idea says in a filing.

These investments will enable the company to improve its competitive positioning and offer an even better customer experience, the filing says.

The proposed fundraise follows a marked improvement in operating metrics. The company has managed to grow its 4G subscriber base and ARPUs consecutively for the last 10 quarters.

“The company remains focused on providing competitive data and voice experience at all locations where it is present. Company is also steadfast in building a differentiated digital experience adding several digital offerings in the recent quarters. The Company has consistently shown an improvement in performance even with limited investments. With the proposed fund raise and the positive operational developments, the Company is confident of effectively competing in the market,” the filing says.

In an earnings call post Q3 results, Akshaya Moondra, CEO of Vodafone Idea, said, “We remain engaged with various parties for fundraising to make required investments for network expansion, including 5G rollout.”

“Our network investments have been impacted on account of liquidity constraints but we continue to upgrade the existing non 4G sites to 4G by spectrum refarming. Over the last one year, we have added almost 700 unique 4G towers and over 5,200 4G broadband sites. As a result, our broadband coverage as well as capacity has expanded. So far we have shut down 3G services in 5 circles of Gujarat, Andhra Pradesh, Maharashtra, Mumbai and Kolkata by refarming the spectrum in these circles to 4G.”

In Q3 FY24, telecom major Vodafone Idea saw its net loss narrowing to ₹6,985 crore as against ₹7,990 crore loss in the same period last year. The average revenue per user (ARPU) of the company rose 7.5% year-on-year to ₹145 from ₹135 in Q3 FY23.

Vodafone Idea fundraise

Vodafone Idea stock tanks 12% as board approves ₹20,000 cr equity fundraise