Idea Cellular to raise Rs 3,500 crore through QIP

Telecom player Idea Cellular on Wednesday said it will raise Rs 3,500 crore by issuing equity shares to eligible investors through qualified institutional placement (QIP) route.

On Monday, Idea had raised Rs 3,250 crore by allotment of shares to entities of promoter group Aditya Birla.

"The Board of Directors today accorded final approval for issuance of equity shares for an amount not exceeding Rs 3,500 crore by way of QIP to the eligible investors," Idea said in a notification to the BSE on Wednesday.

Last month, the company's Board had approved a proposal to raise up to Rs 6,750 crore.

Idea is in the midst of a proposed merger with Vodafone India following a stiff competition started by the new entrant Reliance Jio.

The first tranche of fund-raising had a bearing on the shareholding pattern of the company and also on its merger deal with Vodafone. The two parties have agreed that Aditya Birla Group (ABG) will buy a minimum of 2.5% of the merged entity from Vodafone for Rs 1,960 crore. This equity sale transaction will reduce funding requirement on Vodafone Group from Rs 9,350 crore to Rs 7,390 crore to meet debt arrangement for the merged entity.

The proceeds will also enable Idea Cellular to reduce its debt. The net debt of Idea as on December 31, 2017, stood at Rs 55,781.8 crore.

"This equity infusion reiterates the group's commitment towards the telecom business and confidence in its growth prospects. With the planned fund-raise combined with the recently announced sale of Idea's towers and potential monetisation of the Indus stake, the company will be better capitalised to participate in the growth opportunities offered by the sector," ABG chairman Kumar Mangalam Birla had said on Monday.

Additionally, the recently-announced sale of Idea's and Vodafone India's standalone towers to American Tower Corporation for an aggregate enterprise value of Rs 7,850 crore and the potential monetisation of Idea's 11.15% stake in Indus Towers will further augment the long-term capital resources of the company," Idea had said.

For the third quarter ended December, Idea Cellular had posted a loss of Rs 1,285.6 crore owing to a reduction in interconnection charges and a stiff competition resulting in aggressive tariffs.

The telecom industry is going through a phase of consolidation where Airtel has announced the acquisition of Telenor and wireless operations of Tata Group, Vodafone and Idea Cellular have announced a merger and Reliance Jio is buying out wireless assets of Reliance Communications.

FOR A WARCHEST

• On Monday, Idea had raised Rs 3,250 crore by allotment of shares to entities of promoter group Aditya Birla
   
• Last month, the company’s Board had approved a proposal to raise up to Rs 6,750 crore