In a recent development that signals a boost for Vodafone Idea’s financial restructuring plans, the telecommunication giant has successfully concluded its anchor book allocation prior to the opening of its much-anticipated follow-on public offer (FPO). The company has secured an impressive sum of Rs 5,400 crore from a diverse set of prestigious investors both from India and abroad. This information was divulged through a mandatory filing to the stock exchanges by the telecom operator.
This significant financial move positions Vodafone Idea’s anchor book as potentially the third-largest on record, trailing slightly behind One 97 Communications and the Life Insurance Corporation of India (LIC), which raised Rs 8,235 crore and Rs 5,627 crore, respectively, during their respective anchor rounds.
On Wednesday, according to information shared with the exchanges, Vodafone Idea disclosed an allotment of 490.9 crore shares to 74 funds. The pricing was locked at Rs 11 per share, constituting the upper limit of the offering price range and equating to the talked-about Rs 5,400 crore transaction size.
Details of the allocation revealed that 79.52 crore shares, accounting for 16.2% of the total anchor investment, were claimed by five domestic mutual funds spanning 11 distinct schemes.
The elite roster of shareholders favored in the anchor round comprised global investment giants such as GQG Partners Emerging Markets Equity Fund, Fidelity, UBS Fund Management, the Abu Dhabi Investment Authority, Australian Super, Troo Capital, Morgan Stanley, Citigroup Global Markets Mauritius, and Jupiter Fund Management. Additionally, prominent domestic investors like Motilal Oswal Mutual Fund, HDFC Mutual Fund, SBI General Insurance, and Quant Mutual Fund also captured a substantial share in this round.
Setting a new high water mark in the Indian equity market, Vodafone Idea’s RS 18,000-crore FPO is slated to open for public subscription on April 18 and will run through April 22, with the pricing spectrum set between Rs 10 and Rs 11 per share. The record for the largest FPO prior to this was held by YES Bank, which conducted a Rs 15,000 crore share-sale in the year 2020.
The proceeds from this monumental fundraising venture are anticipated to provide the much-needed financial lifeline for Vodafone Idea. The company plans to channel these resources into an accelerated strategic positioning within the highly competitive telecom market where it presently lags behind sector leaders such as Reliance Jio and Bharti Airtel.
The fresh capital injection is also expected to undergird the company’s initiatives to roll out its delayed 5G services, enhance existing 4G networks, and settle pending dues to vendors.
On April 6, the Board of Vodafone Idea gave the green light to increase its authorized share capital to a staggering Rs 1 lakh crore and approved raising an additional Rs 2,075 crore from the promoter Aditya Birla Group.
These steps come as part of a broader strategic plan unveiled earlier in the year, where Vodafone Idea set its sights on raising a total of Rs 45,000 crore through a balanced combination of equity and debt instruments. The overarching goal is to provide services competitive with Jio and Airtel while also attempting to stem the tide of subscriber losses that have plagued the company.
A daunting battle for survival shadows Vodafone Idea, weighted down by a colossal debt amounting to Rs 2.1 lakh crore and enduring successive quarters of financial losses. Latest reports from the Telecom Regulatory Authority of India (Trai) paint a grim picture, with Vodafone Idea having shed 15.2 lakh wireless subscribers. This attrition reduced its mobile subscriber base to 22.15 crore in January, in stark contrast to terrain gained by its competitors Jio and Airtel.
These strategic financial moves aim to reposition Vodafone Idea not just as a contender in the Indian telecom market, but as a company poised for rejuvenation and long-term stability.
