Investors warm up to Vi, but put the call on hold amid stock fluctuation
Vi plans to raise ₹45,000 crore by the June quarter. Its board last month approved raising ₹20,000 crore via equity or equity-linked instruments. The telco plans to raise another ₹25,000 crore in loans.
New Delhi: A sharp spike in stock last month may have delayed the telco's much-needed , with potential investors informing the government that they will invest once the stock stabilises at around ₹12-13 each, people aware of the matter said. The government, which is the largest shareholder in the cash-strapped carrier with over 33%, will also fully support Vodafone Idea () in the equity fundraising, and is open to participating in a rights issue, if the was to decide on it as a mechanism, the sources said."A few investors, including a prominent name from Singapore, have inquired about investing in the company once the stock price stabilises," one of them told ET.
The person did not provide specific names of the investors but said a few of them have expressed interest to invest in Vodafone Idea, igniting hopes that the equity fundraise would be closed in the coming months.
Another person aware of the negotiations said, "So far, the due diligence is happening, and no final decision has been taken around investing in Vodafone Idea." After touching a high of ₹17.55 on February 23, Vi shares have been trading in the ₹13-14 range since February 28. It fell 9.43% on Wednesday to close at ₹12.39 on the BSE. This gave it a market cap of ₹60,314.3 crore.
Vi plans to raise ₹45,000 crore by the June quarter. Its board last month approved raising ₹20,000 crore via equity or equity-linked instruments. The telco plans to raise another ₹25,000 crore in loans.
The funds will be used to expand and roll out 5G services besides paying vendors, as the loss-making telco strives to stay competitive against moneyed rivals and . The coverage gap with its rivals is the main reason for Vi to be rapidly losing subscriber and revenue market share to and , experts said. Vodafone Idea has so far not specified if it will go for a rights issue to raise funds. But if it does go for a rights issue, the government may participate in it, people cited above said.
"The Cabinet will take a final decision of participating in the rights issue, but the option is open," an official said on condition of anonymity.
Another official said, "If the promoters Aditya Birla Group and Vodafone Group participate in the issue, the government may also join. But whether the option (rights issue) is being considered by the company is not yet clear."
The company's shareholders will meet on April 2 to approve the equity fundraising. Experts believe that it might be a good option for the government to participate in the rights issue as it is the largest shareholder in the company. As reported by ET, Vi is believed to have already appointed bankers and counsels for implementing the equity fundraise by the first quarter of FY25. The telco is looking at three equity funding mechanisms including a preferential allotment, a rights issue, and a follow-on public offer.
The government has reiterated that taking equity in Vi was a temporary provision to support the operator and it will exit at the right time. The government also never uses its rights as the largest shareholder in the telco in taking decisions around operating modalities. Vi plans to launch 5G services in 6-7 months after securing funding. The company believes it would be able to stop its subscriber losses once 5G is rolled out and the gaps in its 4G coverage are plugged.
Source: Stocks-Markets-Economic Times
