Facing financial strain, Vodafone Idea unveiled a significant follow-on public offer (FPO) worth up to Rs 18,000 crore, establishing it as the largest FPO in India. This move follows a recent infusion of Rs 2,075 crore by the Aditya Birla Group through a preferential share issue. With this financial boost, the struggling telecommunications giant aims to enhance its position in the highly competitive Indian market, where it currently lags behind Reliance Jio and Bharti Airtel.
The funds raised will be instrumental in facilitating Vodafone Idea's efforts to bolster its 4G services, prepare for the much-anticipated 5G rollout, and address pending vendor dues. This strategic maneuver comes at a critical time for the company, which has been grappling with a significant loss of subscribers and persistent quarterly losses, weighed down by a massive debt of Rs 2.1 lakh crore.
The FPO, scheduled to open on April 18 and close on April 22, was approved by the company's Board of Directors in a meeting on April 11, 2024. Notably, Vodafone Idea shares experienced a downturn in early trading following the announcement of the Rs 18,000-crore FPO.
The FPO's price band ranges from Rs 10 to Rs 11 per share, with the upper end representing a discount of approximately 26% compared to the recently approved preferential issue price and about 15% lower than the last closing price. The minimum bid lot for the offer is set at 1,298 equity shares, with subsequent bids in multiples of 1,298 shares.
Furthermore, the company disclosed plans to conduct roadshows and engage with investors and analysts across various Indian cities starting from the week of April 15, 2024, until the bid closing day. The anchor investor bid/offer period is scheduled for April 16, 2024.
The recent preferential share issue to the Aditya Birla Group served as a precursor to this ambitious fundraising initiative. On April 6, the Vodafone Idea Board greenlit a proposal to raise Rs 2,075 crore from the Aditya Birla Group through the issuance of equity shares. Additionally, the company's authorized share capital was increased to Rs 1 lakh crore.
Earlier, in an extraordinary general meeting held on April 2, shareholders had approved raising up to Rs 20,000 crore through the issuance of securities. This move aligns with Vodafone Idea's broader strategy to raise Rs 45,000 crore through a combination of equity and debt, aimed at staying competitive with rivals Reliance Jio and Bharti Airtel and mitigating subscriber losses.
Despite these efforts, Vodafone Idea continues to struggle on the subscriber front, as indicated by Trai's data, which reported a significant loss of wireless subscribers in January.
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