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₹18,000 crore Vodafone Idea FPO: An overview


Ailing for a long time and with its very existence threatened, Vodafone Idea (Vi) is grappling with substantial debt and consistent quarterly losses, Vi is now on a fund raising drive that will be akin to a lifeline in an industry that has been taken over by just two major telecom operators, namely Reliance Jio and Bharti Airtel, with Vodafone Idea bringing up the rear, a very far distance behind. Amidst financial turmoil, Vodafone Idea has unveiled a significant Follow-On Public Offer (FPO) to raise up to 18,000 crore, marking a pivotal move in its quest for stability. And if things work out, perhaps it will even be able to raise its competitiveness against Airtel and Jio.

Vodafone Idea FPO is all set to be rolled out on April 18.(REUTERS)
Vodafone Idea FPO is all set to be rolled out on April 18.(REUTERS)

Fundraising Background

The telco’s announcement follows a recent fund infusion of 2,075 crore by the Aditya Birla Group, intended to bolster its financial standing. This move aligns with Vodafone Idea’s broader agenda of raising funds to the tune of 45,000 crore, encompassing both equity and debt components.

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Objectives of the Fundraise

The funds garnered through the FPO aim to provide Vodafone Idea with the necessary resources to enhance its market position, particularly in light of the impending 5G rollout and the imperative need to fortify its 4G services. Additionally, the funds will be allocated towards clearing overdue payments to vendors, crucial for sustaining operational viability.

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FPO Details

Vodafone Idea FPO, slated to commence on April 18 and conclude on April 22, has set a price band of 10-11 per share. The minimum bid lot is determined at 1,298 equity shares, with subsequent bids to be in multiples thereof.

Notably, the upper limit of the price band, 11 per share, represents a considerable discount compared to recent preferential issue prices and the company’s previous closing price.

Regulatory Approvals and Formalities

The company’s board, in a meeting held on April 11, approved the FPO and finalized the pricing details. Additionally, requisite resolutions have been passed for the filing of the red herring prospectus.

Strategic Outreach

Vodafone Idea plans an extensive engagement with investors and analysts through roadshows across various Indian cities, commencing from the week of April 15. An anchor investor bid/offer period has been set for April 16.

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Subscriber Losses

Amidst its financial challenges, Vodafone Idea continues to grapple with subscriber exits, evidenced by a significant loss of wireless subscribers. This underscores the urgency for strategic interventions to stabilize its market position and regain consumer trust. As many as 15.2 lakh wireless subscribers were lost in January, plunging its mobile subscriber base to 22.15 crore. On the other hand, Jio and Airtel have been gaining subscribers in a big way.

Highlights of the Vodafone Idea FPO:

* Vodafone Idea announces a 18,000-crore Follow-On Public Offer (FPO) to bolster its financial standing.

* Objectives include enhancing market position, funding 5G rollout, fortifying 4G services, and settling vendor dues.

* The FPO opens on April 18, with a price band of 10-11 per share.

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* Despite initial market turbulence, strategic initiatives like roadshows aim to attract investor interest.

* The FPO follows a recent fund infusion of 2,075 crore by the Aditya Birla Group, reflecting ongoing efforts to shore up finances.

* Subscriber losses persist, underscoring the urgency for Vodafone Idea to address operational challenges.

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