Vodafone Idea receives Rs 436 crore in funding from Vodafone Group

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• Jun 23, 2022 | Kabir Chakraborty

The issue price of warrants will be Rs 10.20, and 100% of the issue price will be paid upfront at the time of warrant subscription. Each warrant would be convertible into one equity share, and the warrant rights could be exercised at any time during the first 18 months after allotment.

Digital
Desk: Vodafone Idea, a joint venture between Vodafone Group and the Aditya
Birla Group, will raise Rs 436.21 crore from its UK parent at Rs 10.20 per unit
in order to invest in its network and prepare for the upcoming spectrum
auctions.

The
squandering In a filing to the Bombay Stock Exchange, the telco stated that its
board of directors had approved the fund raising "by way of either: (a) up
to 42,76,56,421 Equity Shares of the face value of Rs. 10/- each; or (b) up to
42,76,56,421 Warrants convertible into Equity Shares, to Euro Pacific
Securities Ltd. (a Vodafone Group entity and promoter of the Company), on a
preferential basis."

The
issue price per equity share will be Rs. 10.20 if the funds are raised through
the issuance of equity shares. (including a Re. 0.20 premium per equity share).

The
issue price of warrants will be Rs 10.20, and 100% of the issue price will be
paid upfront at the time of warrant subscription. Each warrant would be
convertible into one equity share, and the warrant rights could be exercised at
any time during the first 18 months after allotment.

At the
close of trading, Vodafone Idea NSE -1.17 percent rose 0.71 percent to Rs 8.53.
The announcement came after the market had closed.

The
board also agreed to call an extraordinary general meeting on Friday, July 15,
2022, to seek shareholder approval for the aforementioned preferential Issue.

The
telco announced earlier this week that it plans to raise up to Rs 500 crore
from its UK promoter.

The
Vodafone Group sold a 7.1 percent stake in Indus Towers in February and March,
2.4 percent in a block deal and 4.7 percent to Bharti Airtel, raising approximately
Rs 3,831 crore. It invested Rs 3,375 crore in Vodafone Idea through the
purchase of newly issued shares. Vodafone Idea used the proceeds to partially
settle outstanding payments to Indus Towers.

According
to analysts, Vodafone Group's new fund infusion will be funded by the remaining
proceeds from its Indus Towers stake. So far, Vodafone Idea has raised a total
of Rs 4,500 crore through the issuance of new equity, with the remainder coming
from the Indian promoter.

The
indebted The telco desperately needs money to invest in its network and
participate in the upcoming spectrum auctions in late July. Aside from the
funds provided by the promoters, the loss-making telco intends to raise another
Rs10,000 crore in equity from an external investor and arrange a similar amount
of debt from its lenders.

However, the process is flatlined until the
government converts the company's accumulated dues interest into 33 percent
equity. The conversion and equity issuance should be completed soon.

Under a government relief package for the telecom
industry, Vodafone Idea chose to defer payment of its adjusted gross revenue
(AGR) and spectrum dues to the government for four years. The telco has also
chosen to convert the interest on the deferred dues into government equity,
resulting in a 33 percent stake in the company. The government will be the
largest shareholder, but the promoters - UK's Vodafone Plc and India's Aditya
Birla Group - will own 50% of the company.