Vodafone Idea on Thursday approved the preferential allotment of nearly 1.7 billion equity shares worth Rs 2,458 crore to its vendors Nokia Solutions and Ericsson India.
With this share issue, Nokia will get a 1.5% stake in Vodafone Idea amounting to Rs 1,520 crore at the issue price. Ericsson will own 0.9% of the company amounting to Rs 938 crore.
The shares will be issued at Rs 14.80 per share, which is 35% higher to the follow-on public offer (FPO) price of Rs 11 a share. The share issue would enable Vodafone Idea to clear part of the vendors’ outstanding dues.
As per the terms, Nokia and Ericsson will have to hold the shares for a minimum of six months. The proposal is subject to approval by the company’s shareholders at the extra-ordinary general meeting (EGM) to be held on July 10.
Post the share issue, the promoters Aditya Birla Group and Vodafone Plc shareholding will stand at 37.3% and shareholding of the government will be at 23.2%. The balance 37.1% will be public shareholding.
Vodafone Idea’s arrangement with its vendors has come at a time when it is looking to launch 5G services and increase the 4G coverage. The share issue will make it easier for the company to place fresh orders of network equipment with its vendors.
“VIL is all set to participate in the industry growth with right investments to expand its 4G coverage and offer 5G experience to its customers while remaining focused on its execution capabilities,” said Akshaya Moondra, chief executive officer of Vodafone Idea.
“As VIL embarks on its growth journey, support from key stakeholders is critical and the agreement with Nokia and Ericsson reaffirms these vendors as long-term partners of the company, and sets the stage for the next phase of our growth,” Moondra added.
With this equity issuance, Vodafone Idea has raised Rs 24,000 crore of equity including conversion of optionally convertible debentures (OCDs) worth Rs 1,440 crore in March by ATC India into equity, Rs 18,000 crore FPO issue in April and preferential issue worth Rs 2,075 crore to promoters in May.
For debt funding of Rs 25,000 crore, the company said it is in active discussion with its lenders.
“This comprehensive fund raise (equity and debt) will empower the company to work towards executing its well-defined strategy including expansion of its 4G coverage and launch of 5G services,” it said in an exchange filing.
As of March end, the company’s mobile subscribers were at 212.6 million.
Vodafone Idea’s net loss for the January-March quarter expanded to Rs 7,674 crore from Rs 6,986 crore in the preceding quarter. The losses expanded owing to fall in revenues and base effect of the preceding quarter where the company recorded a one-time gain of Rs 755.5 crore.
Revenue from operations during the period fell 0.6% q-o-q to Rs 10,607 crore. On a year-on-year basis, the revenue rose 0.7%.