Vodafone Idea plans Rs 2,000 crore fundraising as Vodafone PLC sells remaining Indus Towers stake

Shares of Vodafone Idea Ltd (Vi) are likely to be in focus ahead of a crucial board meeting scheduled for Monday, December 9. The telecom major's board will consider raising up to Rs 2,000 crore through equity shares and/or convertible securities on a preferential basis, primarily from its promoter group entities.

Fundraising plans to ease financial strain

Vodafone Idea has proposed the capital raise as part of its efforts to address financial challenges and meet obligations to Indus Towers under Master Services Agreements (MSAs). The proceeds are expected to be utilized for settling outstanding dues with Indus Towers.

Vodafone PLC to offload Indus Towers stake

Parent company Vodafone PLC announced plans to sell its residual three per cent stake in Indus Towers, totalling 79.2 million shares, via an accelerated book-building process. The stake is held through Omega Telecom Holdings Private Limited (2.26 per cent) and Usha Martin Telematics (0.74 per cent).

Proceeds from this sale will first be used to repay Vodafone’s $101 million in outstanding borrowings, secured against its Indian assets. Any residual proceeds from the sale are intended to be invested in the proposed equity issuance by Vodafone Idea.

Indus Towers releases pledged shares

In line with these developments, Indus Towers confirmed the release of a 3.003 per cent pledge on shares held by Vodafone promoters. This move facilitates the share sale and ensures funds are directed to guarantee Vodafone Idea’s commitments under the MSAs.

Analysts remain cautious

Motilal Oswal Financial Services (MOFSL) noted that while Vodafone Idea’s fundraising and capital expenditure plans could slow market share losses, competitors Bharti Airtel and Reliance Jio are expected to continue capturing Vi’s market share. "We continue to prefer Bharti Airtel and RIL in the telecom space," MOFSL stated.

The fundraising effort and its implications on the company’s operations will be closely monitored by investors, as Vodafone Idea continues to navigate its financial recovery path amid stiff competition in the telecom sector.