The telecommunications landscape is set to witness a strategic capital injection with financially troubled carrier Vodafone Idea declaring that its board has green-lighted a critical funding elevation. The operator is slated to secure INR 2,075 crore from one of its main promoters, the Aditya Birla Group. In coherence with this development, Vodafone Idea seeks to elevate its authorized share capital to an impressive figure of INR 1 trillion. These measures are integral to the company’s ambitious agenda to amass INR 20,000 crore in capital intended to revamp its operational capabilities and mitigate an overbearing debt load.
The forthcoming agenda to ratify these proposals will be tabled before the shareholders at an extraordinary general meeting arranged for May 8, as disclosed in a formal regulatory statement.
In a broader perspective, the equity infusion by the promoter heralds the commencement of Vodafone Idea’s expansive financing blueprint. This multi-faceted strategy envisages a cumulative mobilization of INR 45,000 crore, segments of which encompass both equity and debt. The company envisages securing INR 20,000 crore through the equity route by the end of June, with an additional raise of approximately INR 25,000 crore anticipated from banking institutions thereafter.
Vodafone Idea, a telco giant beleaguered by financial headwinds, anticipates that the aggregated monetary reinforcement will capacitate the repayment of dues to vendors, augment the robustness of its 4G network, and underwrite the impending rollout of 5G services. An endgame for Vodafone Idea is to forge a competitive edge against its economically healthier rivals, notably Reliance Jio and Bharti Airtel.
Detailing its finance-raising maneuver, the company’s filing elucidated that Vodafone Idea’s board has sanctioned the “issuance of up to 1,395,427,034 equity shares of face value of INR 10 each at an issue price of INR 14.87 per equity share (including a premium of INR 4.87 per equity share), aggregating to INR 2,075 crore to Oriana Investments (an Aditya Birla Group entity that is part of the promoter group), on a preferential basis.”
Complementing these funding dynamics, the board also ratified the increment in the authorised share capital of the company, a leap from the extant INR 75,000 crore, bifurcated into INR 70,000 crore of equity share capital and INR 5,000 crore of preference share capital, to an overarching INR 1 trillion. According to the published regulatory filing, this newly approved authorized share capital will also be distributed into INR 95,000 crore equity share capital and INR 5,000 crore preference share capital.
The present gross debt silhouette for Vodafone Idea stands at a staggering INR 2.15 trillion, with a significant portion exceeding 90 percent owed to the government as part of spectrum utilization dues. Presently, the company’s indebtedness to banks hovers below the INR 4,500 crore mark.
Assuming critical importance is the looming fiscal responsibility that Vodafone Idea will face once a moratorium on regulatory dues culminates in FY26, mandating a payment of nearly INR 28,000 crore to the government. This obligation surges from FY27 onwards, propelling debt accountability over INR 41,000 crore toward government coffers.
Analytical prognoses based on Vodafone Idea’s current free cash flow disposition, diminishing market share, and the dearth of fund generation indicate a potential shortfall bubble ballooning to INR 30,000 crore from FY27, according to industry analysts.
Sailing through turbulent tides, Vodafone Idea managed to taper its net losses for the October-December quarter down to INR 6,986 crore, witnessing a reduction from the preceding quarter’s INR 8,738 crore. The company reported a modest year-on-year uptick in revenue from operations by 0.5 percent, thanks to a refined subscriber mix, accrual in 4G user base, and an adjustment in entry-level tariffs.
