In a strategic move to counteract its financial distress, Vodafone Idea announced on Friday its intentions to initiate a massive fundraising effort. The telecom giant is set to raise up to ₹18,000 crore through what is poised to be India’s largest-ever follow-on public offer (FPO). Facing a challenging financial landscape, the company aims to offer its shares in a price band of ₹10-11 each, a significant markdown from the closing price of ₹12.96 on the Bombay Stock Exchange (BSE). This price band is anchored at ₹11, which is a 26% discount to the preferential issue price of ₹14.87 that was recently approved for the promoter entity.
Scheduled to open for anchor investors on April 16th and for the public from April 18th to April 22nd, this FPO represents a pivotal step for Vodafone Idea, which currently holds the position of India’s third-largest telecom service provider. This fundraising venture follows closely on the heels of a capital infusion amounting to ₹2,075 crore by the Aditya Birla group through a preferential share issue concluded the weekend before.
The raised capital is expected to bolster Vodafone Idea’s standing in the fiercely competitive domestic telecom market, which is dominated by rivals Reliance Jio and Bharti Airtel. With a sizeable gap to bridge in terms of 4G coverage and the impending rollout of 5G services, Vodafone Idea aims to use the proceeds to improve its network infrastructure and halt the loss of subscribers that has been afflicting the company.
Vodafone Idea, which has been witnessing a continual exodus of subscribers, bears a gross debt burden of ₹2.15 trillion and has reported successive quarterly losses in the ballpark of ₹6,000-8,000 crore. The pursuit of funds through the FPO is part of a broader strategy envisioned by the company that includes raising ₹20,000 crore through a mix of equity and equity-linked instruments, in addition to a debt raise of around ₹25,000 crore.
Akshaya Moondra, the CEO of Vodafone Idea, candidly addressed shareholders during the company’s extraordinary general meeting this month, highlighting the critical need for funding to remedy the company’s lack of 4G coverage compared to its competitors. Moondra emphasized that the upcoming investments are crucial for narrowing the coverage gap and limiting subscriber losses.
The latest figures from the Telecom Regulatory Authority of India (Trai) depict a grim picture, showing Vodafone Idea as having shed 16.2 million mobile subscribers between April and February, which dwindled its subscriber base to 220.5 million.
In the prospectus shared with potential investors, Vodafone Idea detailed its plans to allocate ₹5,720 crore from the FPO proceeds to initiate 5G services. As per the company’s rollout strategy, 22,000 new 5G sites are set to be established, with 10,000 scheduled for the current fiscal year and an additional 12,000 due for completion in FY26. These sites are planned across 17 high-priority circles.
Further, the telecommunication firm has outlined the use of an additional ₹3,770 crore to acquire equipment for the installation of 26,000 new 4G sites across its service areas. These new sites, designed to offer 4G connectivity, will be established at locations secured from passive infrastructure providers under long-term lease agreements.
Vodafone Idea’s ambitious FPO represents not just a financial lifeline, but also a strategic play aimed at consolidating its market presence and future-proofing its services amidst India’s rapidly advancing telecom landscape. The outcome of this record-setting share sale will be closely observed by industry watchers and could mark a significant turning point for the embattled telco giant.
