Vodafone Idea announces Rs 18,000 crore FPO; offer opens on April 18

Cash-strapped Vodafone Idea on Friday announced a follow-on public offer of up to Rs 18,000 crore at a price band of Rs 10–11 per share, marking the biggest FPO in the country. The fundraise, which comes close on the heels of a Rs 2,075 crore fund infusion by Aditya Birla Group via a preferential share issue earlier this month, would give the ailing telco the firepower to improve its positioning in the Indian telecom market, where it currently trails larger rivals such as Reliance Jio and Bharti Airtel by a wide margin.

The funds would also help VIL shore up finances for the much-delayed 5G rollout, strengthen 4G services, and pay vendor dues.

VIL has been hemorrhaging subscribers month after month and fighting a desperate battle for survival saddled with debt of Rs 2.1 lakh crore and quarterly losses.

According to a statutory filing on Friday, VIL's follow-on offer will open on April 18 and close on April 22.

"The Board of Directors of the company, at its meeting held on April 11, 2024, approved a follow-on public offering (FPO) of equity shares, aggregating up to Rs 18,000 crore. The capital raising committee, in its meeting held today, April 12, 2024, approved the price band for the FPO issuance," the company said in a BSE filing.

Vodafone Idea shares, however, tanked in early trade following the announcement of the Rs 18,000-crore FPO.

The floor price for the mega offer has been set at Rs 10 and the cap at Rs 11 per equity share.

The higher end of the price band (Rs 11) is at a discount of about 26 per cent compared to the recently approved preferential issue price to the promoter entity at Rs 14.87 and a discount of about 15 per cent compared to the last closing price of Rs 12.95.

A minimum bid lot will be 1,298 equity shares, and in the multiples of 1,298 equity shares, thereafter, the company said.

The back-of-the-envelope calculations show that at the upper end of the price band, the minimum application amount would add up to Rs 14,278 for a single lot of shares.

"... Pursuant to the approval accorded by the Board of Directors of the company at its meeting held on February 27, 2024, and the special resolution passed by the members of the company on April 2, 2024, the Board has, at its meeting held today, that is on April 11, 2024...Passed resolution for approving, adopting, and filing of the red herring prospectus dated April 11, 2024, with the Registrar of Companies, Gujarat, at Ahmedabad, in connection with the further public offering of equity shares, aggregating up to Rs 18,000 crore," VIL said.

Prior to this, the largest FPO in the Indian market was a Rs 15,000 crore share sale by Yes Bank.

VIL on Friday said it will be participating in road shows and interacting with investors and analysts in various cities across India from the week of April 15, 2024, up to the bid closing day.

The board has also fixed the anchor investor bid/offer period to be April 16, 2024.

The recent preferential issue of VIL has been a precursor of sorts to this blockbuster fundraising plan by the crisis-ridden telco.

On April 6, the Vodafone Idea Board approved raising Rs 2,075 crore from promoter Aditya Birla Group and increasing its authorised share capital to Rs 1 lakh crore.

The Vodafone Idea board had approved the issuance of up to 1,395,427,034 equity shares of a face value of Rs 10 each at an issue price of Rs 14.87 per equity share (including a premium of Rs 4.87 per equity share), aggregating to Rs 2,075 crore, to Oriana Investments Pte. Ltd (the Aditya Birla Group entity forming part of the promoter group), on a preferential basis.

The company had received shareholders' nod for raising up to Rs 20,000 crore through the issuance of securities in an extraordinary general meeting (EGM) held on April 2.

Earlier this year, Vodafone Idea had outlined plans to raise Rs 45,000 crore through a mix of equity and debt as it looked to match services offered by rivals Reliance Jio and Bharti Airtel and arrest an alarming and prolonged subscriber churn.

According to Trai's data, Vodafone Idea continued to bleed on the subscriber front.

VIL lost 15.2 lakh wireless subscribers, plunging its mobile subscriber base to 22.15 crore in January, in sharp contrast to subscriber gains by Jio and Airtel.