Vodafone raises Rs 7,500 crore in first rupee-bond sale

Vodafone Group Plc's three Indian units raised a combined Rs 7,500 crore ($1.2 billion) in a first ever rupee-bond sale as the company gears up for stiffer competition in the world's second-biggest mobile market.

London-listed Vodafone, which is the No. 2 operator in the South Asian country, raised debt that matures in five years and a month, with a coupon of 10.25 per cent, according to data compiled by Bloomberg. India's top carrier Bharti Airtel, too, raised $1 billion this month.

The fund-raising comes as billionaire Mukesh Ambani's Reliance Jio Infocomm prepares to roll out a $16-billion fourth-generation (4G) voice and data services network by December in a disruption that is expected to curb tariffs, intensify competition and erode margins for incumbents. Vodafone invested $1.5 billion in India during the year through March 31, according to commerce ministry data.

"Vodafone, Bharti and all other telecom companies need to invest in their networks and systems to match the increased competition with Reliance Jio," said Salil Garg, a New-Delhi based director for corporates at Fitch Ratings Ltd's local affiliate India Ratings & Research Pvt. "In order to finance that, telecom companies will exploit all possible options to raise funds."

Vodafone Spacetel borrowed Rs 3,500 crore on June 12, while Vodafone Essar Cellular and Vodafone South raised Rs 2,500 crore and Rs 1,500 crore respectively on June 9 through the bond issuance, which was managed by HSBC Holdings Plc and Standard Chartered Bank. Ben Padovan, a spokesman for Vodafone, declined to comment.

Vodafone India has 4G spectrum in five circles and expects to roll out services in some circles by the end of the year, Chief Executive Officer Sunil Sood said May 19.