The Board of Vodafone Idea, the country’s largest telecom player in terms of subscribers, have approved the price at Rs 12.50 per equity share for its upcoming rights issue worth Rs 25,000 crore. The rights issue will open on April 10 and close on April 24.
The issue price of Rs 12.50 per equity share (including a premium of Rs 2.50 per equity share) is at a massive 61% discount to the previous closing of Rs 32 per share, according to analysts.
The rights entitlement ratio has been fixed at 87 equity shares for every 38 equity shares held by eligible shareholders of the company on the record date i.e. April 2, 2019. The company is raising funds to counter an aggressive competition from Reliance Jio, which disrupted the telecom sector per se and triggered a wave of consolidation.
Airtel also has announced plans to raise Rs 32,000 crore capital, including through a rights issue.
In January this year, the board of directors of Vodafone Idea had approved Rs 25,000 crore fund-raising plan by way of a rights issue to the existing eligible equity shareholders, following which the company received a cabinet nod for foreign direct investment (FDI) infusion in February.
The promoter shareholders, Vodafone Group and Aditya Birla Group, have already announced their plans to pump in up to Rs 11,000 crore and up to Rs 7,250 crore, respectively, in the rights issue. In case the rights issue is under-subscribed, each of the promoter shareholders reserves the right to take up part or whole of the unsubscribed portion, subject to stipulated norms.
UK’s telecom firm Vodafone holds 45.1 stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group controls 26% and Idea shareholders own 28.9%.
Earlier, the experts said the proposed plan of an equity infusion of about Rs 25,000 crore in Vodafone Idea will keep competitive intensity high in the sector, delaying the average revenue per user (ARPU) recovery.
During the July-September quarter, Vodafone Idea loss after tax stood at Rs 4,974 crore, which included a one-time charge of Rs 566 crore, mainly due to integration and merger-related costs.
The merger of Vodafone India and Idea Cellular was a result of consolidation triggered by the entry of Reliance Jio in September 2016 with its free voice calls and dirt cheap data offers for many months before the company started charging minimal amount from its users. Vodafone Idea entity got operational from August 30 last year.
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In January this year, the board of directors of Vodafone Idea had approved Rs 25,000 crore fund-raising plan by way of a rights issue to the existing eligible equity shareholders, following which the company received a cabinet nod for foreign direct investment (FDI) infusion in February.
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