Vodafone Idea (Vi), the third-largest telecom operator in the country, could raise more money through equity sale. The telco recently issued preferential equity shares to Nokia and Ericsson (two major telecom gear vendors) and raised a cumulative Rs 2,458 crore. From the money raised, Vi will pay Rs 1,140 crore to Nokia and Rs 703.5 crore to Ericsson. Vodafone Idea Limited (VIL) owes money to Nokia and Ericsson, and this fundraise, will mostly go towards clearing that debt. However, the remaining amount, Rs 614.5 crore will be used for general corporate purposes by the year-end, said an ET report.
The report also mentioned that further dilution of equity is possible. The telco may seek to raise more money through the same vendors against equity in the future, said JP Morgan in a note.
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In 2024, Vi has already successfully raised around Rs 24,000 crore through equity dilution. A majority of the equity money raised will go towards the capex (capital expenditure) activities including expanding 4G coverage and capacity along with rolling out 5G in the future. VIL confirmed that it is looking to deploy 5G in late 2024.
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For that, it will require the help of Nokia and Ericsson. Neither of the vendors would want to expose themselves further to VIL by giving more products on credit. Thus, Vi is raising money through them against equity and paying back dues. The telco also aims to raise another Rs 45,000 crore through debt in the next few years. VIL has been clearing bank debts on a timely basis and the recent fundraising may instill some confidence in the minds of the lenders.
There may also be a scenario where the government acquires more equity in the telco against reducing the deferred dues.
