Vodafone Idea (Vi), the third-largest telecom operator in India, has been eyeing to raise funds for several years. On April 2, 2024, Vi took votes from its shareholders to go ahead with Rs 20,000 crore fundraising through equity. The telco's CEO (Chief Executive Officer) of Vi, Akshaya Moondra, said that post fundraising, the promoter shareholding in Vodafone Idea would come down to 40% from the current 50%. The CEO reassured the shareholders that 40% equity is still a significant stake for the promoters to keep control over the company.
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Vodafone Idea has been Losing Subscribers and this is the Reason
Other private telcos in the market, including Bharti Airtel and Reliance Jio have been eating up the market share of Vodafone Idea. Moondra attributed the reason for the subscriber loss to an inferior 4G network coverage. Thus, the fundraising will enable Vi to increase capex to expand its 4G networks in India.
Bharti Airtel and Reliance Jio are already targeting rural towns with their 4G and 5G networks, which would further cause subscriber loss to Vi. The complete plans of Vi's fundraising activity also include raising money through debt. The telco won't shy away from raising further debt via lenders and financial institutions because it has been paying off the bank dues on time.
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Most of the existing debt for Vi on its books pertains to AGR (adjusted gross revenue) dues that were added as the Supreme Court sided with the Department of Telecommunications (DoT) on the matter of whether previously paid dues were incomplete.
Vi also has to address vendor dues, which are signficant, and pay off the dues it owes to Indus Towers. Much recently, ATC (American Tower Company) decided to go ahead with the coversion of OCDs (optionally convertible debentures) to equity in the company to reduce debt.
