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Vodafone Idea plans Rs 25000-cr stock sale at sharp discount; shares tumble

Shareholders will be able to buy 87 shares for every 38 shares held for an issue price of Rs 12.50 apiece, the firm said in a statement

Reuters 

Vodafone Idea
Vodafone Idea

Idea Ltd, India's largest company by subscribers, on Wednesday approved Rs 25,000 crore ($3.63 billion) rights issue at a sharp discount, sending its shares tumbling.

The deal is the second major fundraising by an Indian telco this year after announced a similar plan to reduce debt and fund operations in a market blighted by steep price competition.

Shareholders will be able to buy 87 shares for every 38 shares held for an issue price of Rs 12.50 apiece, the firm said in a statement. That will be around 60 percent discount to the current share prices.

Indian telcos are trying to cut debt and shore up balance sheets at a time when the industry grapples with a prolonged price war triggered by the 2016 entry of Reliance Jio Infocomm Ltd, owned by Asia's richest person,

Resulting consolidation included Idea Cellular's merger last year with the Indian operations of Britain's Group PLC in a deal worth $23 billion.

Market conditions also prompted Bharti Airtel this month to sell $525 million worth of stock to Singapore Ltd under a plan to raise $4.6 billion.

After Wednesday's news, Idea stock fell as much as 7.6 percent to 29.60 rupees, its steepest intraday fall in almost two months.

 

 

First Published: Wed, March 20 2019. 14:22 IST
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