Vodafone Idea to solicit Rs 463 crore from Vodafone Group

Vodafone Idea Limited's (VIL) board, sanctioned a preferential fund raise from UK based Euro Pacific Securities, a Vodafone Group entity and business promoter, on Wednesday. The amount of the raise is set up to Rs 436.21 crore. The financially troubled cellular operator, jointly marketed by Vodafone Group and the Aditya Birla Group looks at raising the amount from its UK promoter at Rs 10.20 per unit in order to raise as much money as it can for network upgrades and to get ready for the forthcoming 5G spectrum auctions .

The money may be raised by issuing up to 42,76,56,421 equity shares with a face value of Rs 10 each or as many as 42,76,56,421 warrants convertible into equity shares with a similar face value. In a filing to Bombay Stock Exchange the business stated that, according to the ICDR Regulations, the applicable date for determining the preferential issue's floor price in both scenarios is June 15.

Company promoters  invested nearly 4,500 crore in VIL in March this year. Post this infusion, its investment would total Rs 4,936 crore. Vodafone Idea had previously announced a fund-raising effort to raise Rs 25,000 crore, 5000 crore of which would be raised from the promoters and the balance Rs 20,000 crore would be raised from lenders and investors.

The government i expected to authorize the conversion of Vodafone Idea's debt into equity shortly, which has accelerated the company's fund-raising initiatives. This  will make it easier for the financially strapped telecom company to raise the required Rs 25,000 crore in funds. It is also expected to ease participation in the next 5G spectum sales for VIL.

In order to raise about Rs 3,831 crore, Vodafone Group sold 7.1 percent of its share in Indus Towers during February and March- 2.4 percent through a block deal and 4.7 percent to Bharti Airtel. It spent Rs 3,375 crore of this in Vodafone Idea. VIL utilised the money to pay Indus Towers some of the money that was still owed to it.

In accordance with a government assistance programme for the telecom industry, VIL chose to postpone the payment of its Adujusted Gross Revenue (AGR) and spectrum dues to the government by four years. IT  has made the decision to convert interest on deffered payments into government stock, which equates to a 33 percent ownership in the business. The promoters, UK-based Vodafone Plc and the Aditya Birla Group would each own 50% of the company, making the government the majority stakeholder.