Vodafone Idea board approves up to ₹25,000 crore fund raising plan

Vodafone Idearaising plan board on Friday approved up to ₹25,000 crores fundraising plan through share sale and debt, according to a statement released by the telecom giant. The board of debtridden telecom firm approved raising up to ₹15,000 crores by either issuing equity shares, Global Depository Receipts, American Depository Receipts, foreign currency convertible bonds, convertible debentures, warrants, composite iconvertible debentures and warrants” the company said in a statement.

The board, at its meeting on Sept. 4, approved raising up to Rs 15,000 crore by way of either issuing equity shares, global depository receipts, American depository receipts, f oreign currency bonds, convertible debentures, or warrants, according to its exchange filing. It also approved raising up to Rs 15,000 crore

by issuing nonconvertible debentures by way of a public offer or a private placement. However, the total fundraise shall not exceed Rs 25,000 crore, the filing said. Vodafone Idea’s fundraising comes when the billionaire Kumar Mangalam Birla and Vodafone Group Plc.owned carrier received some legal relief from the Supreme Court in a nearly two decade battle wiith the government over the calculation of adjusted gross revenue.

Vodafone Idea posted a loss of ₹25,460 crore in the first quarter. The decline in ARPU in the June quarter to ₹114 was due to lower recharge of tariff plan b y customers in the wake of COVID19 outbreak. The company owes Rs 50,400 crore to the Department of Telecommunications in past dues and is weighed down by the Rs 1,65,900crore debt (including AGR liabilities) and eight straight quarterly losses. BofA Securities estimates that Vodafone Idea’s netd to Ebitda will jump from 7.1 times to 8.4 times for 2021 22. Of this, it has already paid ₹7,854 crore. The Supreme Court earlier asked telcos to pay 10% of the AGR dues upfront and has set a 10 year payment timeline for the rest of the amount.

Analysts said the company will have to hike tariffs and cut costs to sustain operations. While BofA Securities expects average revenue per user requirement of Rs 200 (from current Rs 114) to 240 over the next 18 months cover the AGR impact, Morgan Stanley sees it at Rs 199.

But tariff hikes appear difficult as the carrier lost 580 basis points in revenue market share in the quarter ended June. Its share in metro cities dropped from 42% in 201617 to 18% as of June 2020. Even in key urban markets, the share declined from 40% to 25%. That compares with a 470and 200basispoints gain in market share of Reliance Jio InfoComm Ltd. and Bharti Airtel Ltd., respectively, during the quarter.

Earlier on Friday, shares of Vodafone Idea extended their gains to the third straight session. The scrip jumped 51.29% to its fresh 52week high of ₹13.45 on September 4 from ₹8.89 on September 1. But it closed 4.4% lower at ₹12.01.