Government Clears Vodafone Idea’s FDI Proposal Ahead of Rs 25,000 Crore Fundraising

Follow Us

The government on Thursday cleared an FDI proposal of telecom giant Vodafone Idea Limited (VIL) ahead of its proposed fundraising up to Rs 25,000 crore rights issue. "The Cabinet has approved the proposal of Vodafone Idea Ltd, which had proposed foreign direct investment (FDI) of more than Rs 5,000 crore which may extend up to Rs 25,000 crore," Finance Minister Arun Jaitley said after announcing the decisions taken by the Cabinet Committee on Economic Affairs (CCEA). The CCEA has also approved to take on record the proposed changes in the indirect foreign investment in the subsidiaries of VIL that will take place on account of non-residents subscribing to the equity shares in the fundraising, an official statement said.




Foreign direct investment up to 100% is allowed in India's booming telecom services sector with 49 per cent allowed under the automatic route and beyond that through government route subject to observance of stipulated conditions by the licensee and investors. "However, in consideration of the extant FDI policy and procedure, it is necessary to take the government approval for FDI beyond Rs 5,000 crore even if there is no change in the percentage of foreign/ NRI equity already approved," the statement said.

Last month, the board of directors of VIL had approved Rs 25,000 crore fundraising plan by way of the rights issue to the existing eligible equity shareholders.

The promoter shareholders Vodafone Group and Aditya Birla Group have told the board that they intend to contribute up to Rs 11,000 crore and up to Rs 7,250 crore, respectively, as part of such rights issue.

The proposed rights issue will arm Vodafone Idea Ltd with ammo to take on market competition intensified by Reliance Jio. Also, Vodafone Idea has recently approached the telecom department seeking a two-year moratorium on its annual spectrum payment of about Rs 10,000 crore, citing high debt levels and stress on the balance sheet.

British telecom major Vodafone holds 45.1 stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group controls 26% and Idea shareholders own 28.9%. The mega-merger was announced a few months after the entry of the deep-pocketed Reliance Jio, whose aggressive pricing and freebies have impacted the financials of the entire industry that has even seen bankruptcies and asset sell-offs.

The CCEA decision comes on a day when another telecom operator Bharti Airtel's Board has approved fundraising plans of up to Rs 32,000 crore through a mix of rights issue and bond.

Recent Comments

TheAndroidFreak :

Off Topic :Nothing Phone 3

OnePlus 13 and Xiaomi 15 to Feature Qualcomm Snapdragon 8…

rks :

Kahan kahan kiya Bhai Mera village Aaj bhi tujhe pukare jo 2g lagaya h usko 4g kar de Zara.

Vi Added 100 Towers Every Hour to Expand Network

TheAndroidFreak :

Off Topic: REDMI Turbo 4 Spotted on BIS Certification with model no 2412DPC0AI 6.67",1.5K Resolution 120HZ Refresh Rate MTK Dimensity…

OnePlus 13 and Xiaomi 15 to Feature Qualcomm Snapdragon 8…

TheAndroidFreak :

Off Topic: Poco F7 Ultra camera 50MP Light Hunter 800 1/1.55" OIS Primary 32MP 120° FOV Ultra-wide 50MP JN5 1/2.76"…

OnePlus 13 and Xiaomi 15 to Feature Qualcomm Snapdragon 8…

TheAndroidFreak :

Off Topic : Battery life will be crazy. ??

OnePlus 13 and Xiaomi 15 to Feature Qualcomm Snapdragon 8…

Load More
Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments