Vodafone Idea's Rs 18,000 cr FPO gets over the line; issue subscribed 1.5x

22 April 2024

VIL has already allotted 4.9 billion shares to anchor investors, which includes GQG Partners Fidelity, Stichting, Redwheel, Motilal Oswal Mutual Fund and Troo Capital

Vodafone Idea's Rs 18,000 cr FPO gets over the line; issue subscribed 1.5x

The Rs 18,000-crore follow-on public offering (FPO) of Vodafone Idea (VIL) has successfully sailed through despite volatile market conditions.

As of 1:42pm on Monday, the issue had garnered 1.5 times subscription. The country’s largest-ever FPO garnered bids for nearly 18.73 billion shares, as against 12.6 billion on offer, with 6.72 billion bids coming from foreign portfolio investors (FPIs).

The qualified institutional buyer (QIB) portion of the FPO was subscribed 2.82 per cent, high net-worth individual (HNI) portion 2.3 times and retail portion 0.95 times.

VIL has already allotted 4.9 billion shares to anchor investors, which includes GQG Partners Fidelity, Stichting, Redwheel, Motilal Oswal Mutual Fund and Troo Capital.

Shares of VIL were down 5.4 per cent in the secondary market and were trading at Rs 12.2.

With this, the discount to the upper end of the FPO price band of Rs 11 is now less than 10 per cent.

The FPO proceeds and the recent Rs 2,075-crore preferential issuance made to the promoter Aditya Birla group is expected to give a few more years of runway to the beleaguered telecom operator.

VIL plans to expand the existing and new 4G sites and set up new 5G sites with the FPO proceeds. It will spend about Rs 2,175 crore on deferred spectrum payments to the Department of Telecommunications.

Currently, Vodafone Idea is one of the most indebted and financially stressed companies in the country with a total outstanding debt of Rs 2.38 trillion and a negative net worth of Rs 74,359 crore at the end of March 2023.

The mobile operator has been consistently making losses for the last eight years and reported a net loss of Rs 29,371 crore and cash loss of Rs 6,251 crore in FY 2022-23.

Due to continuous losses incurred by its operations, Vodafone Idea has lagged behind its peers in fresh investment in network expansion and new technologies such as 5G.

For example, in the last three years, Vodafone Idea has cumulatively invested around Rs 48,000 crore on capex, less than half that of Bharti Airtel’s around Rs 1.12 trillion and one-fifth that of Reliance Jio’s Rs 2.5 trillion capex in the period.

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