Vi Approves Up to Rs. 14,500-Crore Fundraising, Promoters to Inject Rs. 4,500 Crore

Debt-ridden telecom operator Vodafone Idea (VIL) on Thursday said its board has approved raising up to Rs. 14,500 crore, including Rs. 4,500 crore from promoter entities — Vodafone and Aditya Birla Group. An amount of Rs. 10,000 crore would be raised by way of equity or debt instruments, in one or more tranches.

In a regulatory filing, the company said the board has cleared issuance of up to 338.3 crore equity shares of face value of Rs. 10 each at an issue price of Rs. 13.30 per equity share for an aggregate consideration of up to Rs. 4,500 crore.

These shares will be issued to Euro Pacific Securities Limited and Prime Metals Limited (Vodafone Group entities and promoters of the company), and Oriana Investments Private Limited (an Aditya Birla Group entity) on a preferential basis, the BSE filing said.

In a separate filing overseas, British telecom giant Vodafone Group said it intends to contribute up to Rs. 3,375 crore (USD 450 million) in VIL's capital raise from net proceeds realised through the sale of the primary shares in Indus Towers.

"Vodafone has the option to contribute any residual proceeds from the sale of the Primary Shares as capital to VIL before 15 July 2022," Vodafone said. Any residual proceeds that are not contributed to VIL will be available to Indus until November 19, 2022 to guarantee the Indian telecom operator's obligations under the Master Services Agreements, Vodafone added.

Vodafone Group said on February 24, 2022, the sale of 63.6 million shares in Indus Towers was successfully executed through an accelerated book build offering at Rs. 226.84 per Indus share. The placing generated net proceeds of about Rs 1,420 crore.

Following this, Vodafone entered into an agreement with Bharti Airtel (one of the existing promoters of Indus) to sell further 127.1 million shares in the telecom tower company. Meanwhile, Vodafone Idea said an extraordinary general meeting will be held on March 26, 2022, to approve the capital raise.

VIL board has approved issuance of equity shares or securities convertible into equity shares, among other instruments to raise up to Rs. 10,000 crore.

The company will also look at raising the amount by way of Global Depository Receipts (GDRs), American Depository Receipts (ADRs), Foreign Currency Convertible Bonds (FCCBs), convertible debentures, warrants, composite issue of non-convertible debentures and warrants.

Such fundraising would be done by way of private placement, qualified institutional placement or through any other permissible mode in one or more tranches, the VIL filing said. Birlas own over 27 percent stake in VIL, while Vodafone Group holds more than 44 percent.

Telecom service providers, VIL in particular, got a shot in the arm with the government last year approving a blockbuster relief package that included a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route.

The government also gave telcos the option to convert the interest amount pertaining to the moratorium period into equity.

Following this, Vodafone Idea has opted to pay interest dues of around Rs 16,000 crore through preferential share. This will result in the government holding 35.8 percent stake in the company.

Asked about the status of Vodafone Idea's equity conversion proposal, Telecom Minister Ashwini Vaishnaw had recently told PTI: "We are appointing professionals to evaluate the entire thing. It is primarily a financial decision so there is a proper process laid out in DIPAM (Department of Investment and Public Asset Management). They are appointing the transaction advisor." Transaction advisors are legal and financial experts, who look at valuation, equity structure, and other aspects of a deal. The process could be completed in a couple of months.

Over the last few months, Indian telecom operators have been adding more firepower to their arsenal as the market gears up for rollout of 5G services that will usher in ultra high-speeds and spawn new-age services and business models.

The Telecom Department is working to prepare the groundwork for auction of radiowaves, even as regulator TRAI finalises its recommendations on spectrum pricing and other aspects.

DoT has approached TRAI requesting it to expedite spectrum recommendations, after the PMO urged it to work towards the initial launch of 5G by August 15, 2022 and to explore possibility of obtaining requisite views from the regulator before March.