Vodafone Idea FPO: ‘Fresh lease of life’, says KM Birla, hints at 5G rollout, network expansion

The fundraise of ₹18,000 crore through the follow-on public offer (FPO) is a “fresh lease of life” for Vodafone Idea, said Kumar Mangalam Birla, the chairman of Aditya Birla Group which holds an 18% stake in the cash-strapped telecom firm.

Birla, when asked by reporters whether the fundraise would allow Vodafone Idea to address most of the issues that it is facing, answered in the affirmative. "And this is like a sort of fresh lease of life for the company," he added, according to news agency PTI.

Also Read: Vodafone Idea FPO listing: Shares list at 7% premium over FPO price

How the FPO proceeds will be used

While Birla did not share the company’s full roadmap on using the FPO proceeds, he indicated that the funds raised would be put to use towards the roll out of high-speed 5 network and expanding its network.

Vodafone Idea, which has been struggling to hold on to subscribers amid heavy competition in the sector, will focus on increasing its network and selectively introduce 5G services, Birla told reporters at the listing ceremony of the FPO.

Earlier, the telco’s CEO Akshaya Moondra said during a press conference on April 15 that the company would expand its 5G footprint following the fundraise. The company is in possession of 5G spectrum in 17 priority circles, and is also equipped with 5G-related infrastructure.

While Vodafone Idea is planning to roll out 5G after the FPO, rivals Bharti Airtel and Reliance Jio have already expanded the high-speed internet services network.

Both, Jio and Airtel, launched 5G in 2022-end, and began rolling out the services across several cities throughout 2023. In October 2023, Airtel claimed to have spread its ‘5G plus’ in over 500 Indian cities. Earlier, Jio claimed in March 2023 that it has extended its ‘True 5G’ services in 406 cities.

Vodafone Idea lists at 7% premium over FPO price

Shares of Vodafone Idea opened at ₹11.80, a premium of 7.2%, after its follow-on public offering listed on the bourses on Thursday, April 25, 2024.

At 11:15 am, the stock was trading at ₹13.45 per share, reflecting a gain of over 22% from the issue price of ₹11 apiece.

The FPO was oversubscribed nearly seven times as it received bids worth ₹88,124 crore. However, the company only retained ₹12,600 crore as it had collected ₹5,400 crore from anchor investors.

The FPO was the largest ever in the Indian market, after the ₹15,000 crore fundraise by private lender Yes Bank in 2020 through the follow-on public offering route.

Presently, Vodafone Idea is seen to be struggling in the Indian telecom market that is dominated by Jio and Airtel. At the end of February 2024, its subscriber base stood at 220.5 million, down 1 million as compared to the preceding month.

With PTI inputs