Vodafone Idea shares climb 2% as board approves Rs 1,980 crore preferential issue

Vodafone Idea's share price rose over 2 per cent in early trade on Tuesday, December 10, following the announcement of its board's approval to raise up to Rs 1,980 crore through a preferential issue. The telecom stock opened at Rs 8.25, up from its previous close of Rs 8.10, and briefly touched Rs 8.29, reflecting a 2.35 per cent gain. By 9:25 a.m., the shares were trading at Rs 8.19, up 1.11 per cent on the BSE.

Key highlights of the preferential issue

The company plans to issue 175.53 crore equity shares at an issue price of Rs 11.28 each. These shares will be allocated to two Vodafone Group entities:

• Omega Telecom Holdings Private Limited (for Rs 1,280 crore)

• Usha Martin Telematics Limited (for Rs 700 crore).

After the allotment, Omega Telecom's stake will rise from 0.40 per cent to 1.98 per cent, while Usha Martin Telematics' holding will increase from 0.13 per cent to 1 per cent. The issue price includes a premium of Rs 1.28 per share, and December 6, 2024, was set as the relevant date for determining the floor price.

This fundraiser is a positive development for Vodafone Idea, which has been grappling with significant debt. The infusion is expected to help the telecom major address its financial challenges and improve operational capabilities.

Recent performance and outlook

Despite Tuesday's uptick, Vodafone Idea's share price has been under pressure. The stock has dropped 49 per cent over the last six months, hitting a 52-week low of Rs 6.61 on November 22. It had reached a 52-week high of Rs 19.18 on June 28 but faced heavy sell-offs subsequently.

In Q2FY25, the company reported a narrower loss of Rs 7,175.9 crore compared to Rs 8,746.6 crore a year ago. Revenue rose to Rs 10,932.2 crore, driven by a tariff hike in July, which boosted average revenue per user (ARPU) by 7.8 per cent sequentially to Rs 166.