Vi shareholders approve Rs 20,000 cr fundraise through securities issuance

The telco is looking to raise up to Rs 45,000 crore through equity & debt

Vodafone Idea (Vi) has received the go-ahead by its shareholders to raise up to Rs 20,000 crore by issuing securities.

In an exchange filing, the financially-beleaguered telecom operator on Tuesday said the decision was taken after an extraordinary general meeting (EGM) was held to seek shareholder approval.

While 85 per cent of shareholders attended the e-voting, 99 per cent of votes were cast in favour of the 'special resolution' to raise fresh funds.

The latest approval by the board is, however, less than half of the initial amount of Rs 45,000 crore planned to be raised by the company.

In February, Vi's board had approved a Rs 45,000-crore fund raising initiative, through both equity and debt. The rest of the funds will be raised through a follow-on issue.

Once raised, the funds may allow the telecom major to expand its 4G network and roll out 5G services. This will be necessary to stem the steady outflow of consumers. The telco has lost consumers every month for the past 17 months.

It held a 19.09 per cent share of the Indian mobile telephony market at January-end, according to government data.

Meanwhile, any fresh funds raised from banks will be used for deployment of capital expenditure, and not to service existing dues, Vodafone Idea chief executive officer (CEO) Akshaya Moondra had said last year.

At the end of the third quarter of FY24 (October-December), Vi had an enormous total gross debt — excluding lease liabilities — of Rs 2.14 trillion. This included deferred spectrum payment obligations of Rs 1.38 trillion.

The telco also had an adjusted gross revenue (AGR) liability of Rs 69,020 crore that is owed to the government. In 2024, the company is staring at a repayment of Rs 5,400-crore debt.

After opening at Rs 13.22, Vi shares rose to a high of Rs 13.95 in intraday trading, before closing at Rs 13.6 a piece.

The UK's Vodafone Group Plc owns 18.1 per cent of Vodafone Idea, while the Aditya Birla Group holds 32.3 per cent stake.

Multi pronged effort

The latest move will provide a fresh impetus to the overall fundraising efforts. It may convince the government that Vi is making progress, a company official said.

Since March, Vi has stepped up efforts to secure funding. Vi executives had met institutional investors in Singapore and Mumbai. The company had said no unpublished price sensitive information (UPSI) was shared during the one-to-one and group meetings.

On March 18, the telco also announced that it will issue equity shares worth Rs 1,440 crore to ATC Telecom Infrastructure Private Limited (ATC TIPL), the Indian arm of American Tower Corporation. This will marginally reduce Vi's debt burden.

The decision came after ATC TIPL requested that the 14,400 optionally convertible debentures (OCDs) held by it, be converted into 1.44 billion shares at a face value of Rs 10 each.

Back in February 2023, Vi had allotted OCDs worth Rs 1,600 crore to ATC TIPL against dues owed to the latter.

The proceeds were being used by Vi to clear its dues to the US tower company, estimated around Rs 2,000 crore.

OCDs are debt securities, which let the issuer raise capital by initially issuing debentures. In return, the issuer pays interest to the investor till the maturity date.