Vodafone Idea shares rise after company to consider preferential issue to promoters

Vodafone Idea has clarified in a statement that the company’s board meeting scheduled to be held on April 6 is for considering fund raise of upto ₹2,075 crore through preferential issue to promoters. Shares of the company opened over 2% higher on Thursday morning.

“It is hereby informed that the Board meeting that is proposed to be held on Saturday, 6th April, 2024, is for considering issuance of equity / convertible securities on preferential basis to one or more promoter group entities for a sum upto ₹2075 crore,” the company said in an exchange filing.

The announcement follows the company receiving shareholder approval for raising ₹20,000 crore. The fundraising plan was announced earlier where the telecom company had indicated promoters will also participate in the issue.

Aggressive fund raising

Apart from the issue, Vodafone Idea also said it remains actively engaged with its lenders for tying-up the debt funding, which will follow the equity fund raise. “Through a combination of equity and debt, the company plans to raise around ₹45,000 crore. The company’s bank debt currently stands at less than ₹4,500 crore,” it said in an earlier filing.

Vodafone Idea said the equity and debt fund raising will enable it to make investments towards significant expansion of 4G coverage, 5G network rollout and capacity expansion while also aiding in improving its competitive positioning.

The telecom carrier pointed out that the proposed fund raise comes on the heels of a significant improvement in its operating metrics. For instance, the company has grown its 4G subscriber base and average revenue per user (ARPUs) consecutively for the last 10 quarters.

For the third quarter, Vodafone Idea’s revenues grew 0.5% year-over-year to ₹10,673 crore supported by improving subscriber mix, 4G subscriber additions and change in entry level plan.

ARPU for the quarter stood at ₹145 compared to ₹135 in the same quarter a year ago witnessing a growth of 7.4% y-o-y.