Vodafone Idea's (Vi) board of directors met on Feb 27, 2024, to discuss fundraising options. In a release, the telco has confirmed that its board has decided to raise Rs 20,000 crore through equity and/or equity-linked instruments. The company will hold a shareholders meeting on April 2 to get their nod for going ahead with the fundraiser.
What's major is that the telco expects to raise money in the coming quarter, which is Q1 FY25. Further, Vi said that its promoters are also going to participate. So it is pretty evident that the Aditya Birla Group will pitch in additional capital into the company. However, it needs to be a substantial amount of capital to ensure that the interested parties (wanting to invest in Vi via equity) or lenders see the confidence that the promoter has in the company.
Apart from equity, Vi will also look to raise money through debt-funding. Through a combination of debt and equity, Vi wants to raise about Rs 45,000 crore. This means that the telco is looking to raise about Rs 25,000 crore through debt. Vi's total bank debt today stands at Rs 4,500 crore, and the telco is repaying it quickly and in a timely manner.
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Here's what Vi Said Would Happen through the Fund Raising
Vi said in a release, "The equity and debt fund raising will enable the Company to make investments towards significant expansion of 4G coverage, 5G network rollout and capacity expansion. These investments will enable the company to improve its competitive positioning and offer an even better customer experience."
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What You Should Know
Previously, Vi's board has made similar calls to raise funds. But the end result was that the telco couldn't find any investor's confidence. The promoters have pitched additional capital in the past, but it wasn't a significant chunk to move the needle for the company.
The only major difference between the previous fundraising announcements and this one is that the telco has announced that promoters will be joining too. It is not hard to understand that it is the Aditya Birla Group only that will be infusing more capital. Vodafone UK, a major promoter of Vi, has openly shown disinterest in its Indian business and said that it doesn't want to infuse any more capital into the company.
The current debt for Vi stands at Rs 2.15 lakh crore and most of it is statutory dues. The company will have to start making payments for the deferred dues from the third quarter of FY26. Thus, the telco needs access to more funds in the short-term to be able to upgrade networks compete with Jio and Airtel and avoid losing revenue market share to them.
