Vodafone Idea CEO Akshaya Moondra on Tuesday said the promoter shareholding in the company will fall to about 40% from 50% now, post the equity fund-raise of Rs 20,000 crore. The company expects to complete the fund-raise in the coming quarter.Currently, the promoters- Aditya Birla group and Vodafone Group –collectively hold a 48.91% share in Vi. “The promoter shareholding is still at a very good level, there is no concern there,” Moondra said, adding the funds would be used for capital expenditure.
He was addressing an extraordinary general meeting (EGM) to seek shareholders’ approval to issue securities up to an aggregate of Rs 20,000 crore. Moondra attributed the subscriber loss to the lack of 4G coverage vis a vis competition. The investment in capex, he said, would enable Vi to bridge the gap. It would also enable the firm to improve its profitability and give some returns to the investors, he added.Non executive chairman Ravinder Takkar told shareholders that with the right investments, the company was confident of competing in the market and participating in the market growth.
Vi did not specify the route for equity fund-raise simply saying all options were being evaluated. Last month, the company’s board had approved a total fund-raise of Rs 45,000 crore of which Rs 25,000 is to be raised through debt instruments. The Aditya Birla Group has committed to infusing Rs 2,000 crore into Vodafone Idea. The company also recently issued equity shares to its vendor American Tower Company (ATC) through conversion of optionally convertible debentures (OCDs) worth Rs 1,440 crore. ATC now holds 2.87% stake in Vodafone Idea.
The fund-raise is important because once the moratorium on regulatory dues expires in FY26, Vi would need to pay the government around Rs 28,000 crore. From FY27 onwards, Vi’s dues to government will be over Rs 41,000 crore. Moondra said there is no reason to approach the government today for an extension of the moratorium”. “As part of the reforms package, the government had announced that post the moratorium, if the company needs support they will be looking at or willing to convert the deferred series of instalments into equity at their option,” Moondra said, adding that its a decision for the government.
Based on the company’s current free cash flow position, shrinking market share and absence of a fund-raise, Vodafone Idea is expected to have a gap of Rs 30,000 crore FY27 onwards, according to analysts.Vodafone Idea’s net loss for the October-December quarter narrowed to Rs 6,986 crore from Rs 8,738 crore in the preceding quarter. Revenue from operations rose 0.5% year-on-year, owing to improvement in subscriber mix, 4G subscriber additions and increase in entry level tariffs. Analysts at brokerage house Morgan Stanley observed that any potential large fund-raising by the telecom operator will further enhance the possibility of current market structure prevailing and would lower the probability of any imminent consolidation in the industry.