New Delhi: Cash-strapped Vodafone Idea moved ahead with a mega funding round, after years of losses, high interest outgo, heavy debt, and announced a fund-raise to the tune of Rs 45,000 crore through a mix of equity and debt as the company looks to work out a revival. It will finally kickstart investments for network expansion and launching high-speed 5G services to compete with bigger rivals Reliance Jio and Bharti Airtel.
The company had been promising to drive in massive investments for last nearly three years, but had failed to materialise a credible and substantial funding round, despite support from govt that went ahead to acquire a 33% equity into the country’s third-largest telco in lieu of future investment payouts towards it.
The board of directors of Vodafone Idea, which is run by a management spearheaded by original promoters Aditya Birla Group (of Kumar Mangalam Birla) and Vodafone of UK — on Tuesday approved the funding where Rs 20,000 crore will come via a combination of equity and/or equity-linked instruments. The board also approved an additional Rs 25,000 crore of investment, which would be managed through a combination of equity and debt. “The promoters will also participate in the proposed equity raise, as committed earlier,” it said, without giving out further details.
The move will be a relief for govt, which wants to have a three-player private telco market, as well as millions of Vodafone Idea’s customers (it has nearly 22.3 crore customers despite millions porting out) and financial investors, who had been waiting to see the company get into an investment mode.
“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 a better customer experience,” Vodafone Idea said after end of the board meet.
Vodafone Idea has a debt of Rs 2.2 lakh crore. Its net loss narrowed to Rs 6,986 crore for Dec 2023 quarter, helped by a Rs 755 crore one-time exceptional gain, while average revenue per user improved. Its net loss stood at Rs 7,990 crore in the year-ago period.
The company said it has been able to arrest worsening of financial performance over the past few quarters by driving in efficiencies in operations, despite being handicapped by lack of funds and poor network expansion. The new funding will be able to help in effecting a quicker reversal.
Revenue from operations for the company remained nearly flat at Rs 10,673 crore in third quarter of this year.
The company had been promising to drive in massive investments for last nearly three years, but had failed to materialise a credible and substantial funding round, despite support from govt that went ahead to acquire a 33% equity into the country’s third-largest telco in lieu of future investment payouts towards it.
The board of directors of Vodafone Idea, which is run by a management spearheaded by original promoters Aditya Birla Group (of Kumar Mangalam Birla) and Vodafone of UK — on Tuesday approved the funding where Rs 20,000 crore will come via a combination of equity and/or equity-linked instruments. The board also approved an additional Rs 25,000 crore of investment, which would be managed through a combination of equity and debt. “The promoters will also participate in the proposed equity raise, as committed earlier,” it said, without giving out further details.
The move will be a relief for govt, which wants to have a three-player private telco market, as well as millions of Vodafone Idea’s customers (it has nearly 22.3 crore customers despite millions porting out) and financial investors, who had been waiting to see the company get into an investment mode.
“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 a better customer experience,” Vodafone Idea said after end of the board meet.
Vodafone Idea has a debt of Rs 2.2 lakh crore. Its net loss narrowed to Rs 6,986 crore for Dec 2023 quarter, helped by a Rs 755 crore one-time exceptional gain, while average revenue per user improved. Its net loss stood at Rs 7,990 crore in the year-ago period.
The company said it has been able to arrest worsening of financial performance over the past few quarters by driving in efficiencies in operations, despite being handicapped by lack of funds and poor network expansion. The new funding will be able to help in effecting a quicker reversal.
Revenue from operations for the company remained nearly flat at Rs 10,673 crore in third quarter of this year.