Vodafone Idea on Thursday said the company’s board will meet on February 27 to consider and evaluate proposals to raise funds.
Speaking to reporters at Panipat, Aditya Birla Group chairman, Kumar Mangalam Birla said the group remains very committed to Vodafone Idea. “Efforts are on to get outside investors. We remain as committed as we have been in past,” Birla, a director on the Vodafone Idea board, said.
In a regulatory filing, the company said the fundraise could be in one or more tranches by way of a rights issue, further public offer, private placement including preferential allotment, qualified institutions placement or through any other permissible mode and/or combination thereof as may be considered appropriate.
It could also be through issue of equity shares or by way of issue of any instruments or securities including securities convertible into equity shares, global depository receipts, American depository receipts or bonds including foreign currency convertible bonds, convertible debentures, warrants, and/or non-convertible debentures including non-convertible debentures along with warrants, which may or may not be listed. A fundraise is crucial for the company to sustain its operations, arrest subscriber churn by improving its network, as well as clear its vendor debt.
The company has been looking to raise Rs 25,000 crore based on its earlier board approval for a long time now. Of the Rs 25,000 crore, it has raised about Rs 5,000 crore from promoters so far, and there is commitment of another Rs 2,000 crore. It was expecting to finalise a fundraise plan by December 2023, which did not materialise.
Its focus is to tie up equity investments first, on the basis of which banks will lend to the company, chief executive officer Akshaya Moondra had said in October last year.
By December, the company has an obligation to pay debt of around Rs 5,400 crore. The debt includes Rs 533 crore towards spectrum payment, Rs 3,200 crore to banks, and repayment of optionally convertible debentures (OCDs) of Rs 1,600 crore. It also owes about Rs 5,700 crore to one of its major vendors, Indus Towers, as past dues.
In FY26, once the moratorium on regulatory dues is over, the company will have an obligation to pay around Rs 28,000 crore to the government. From FY27 onwards, Vodafone Idea will have a debt obligation of over Rs 41,000 crore to the government.
Based on the company’s free cashflow position, weakening market share, and absence of a fundraise, Vodafone Idea is expected to have a gap of Rs 30,000 crore FY27 onwards, according to analysts.
Last month, many brokerage firms, including Kotak Institutional Equities, Goldman Sachs, JP Morgan, expressed concerns over Vodafone Idea’s continuous loss of subscribers and higher debt obligation after the moratorium on regulatory dues. They expect the company’s market share erosion to continue in the absence of a meaningful fundraise, investment in 4G network expansion and 5G launch.
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.
At the end of the October-December quarter, the company’s gross debt (excluding lease liabilities and including interest accrued but not due) rose to Rs 2.15 trillion from Rs 2.13 trillion in the preceding quarter. The gross debt comprises deferred spectrum payment obligations of Rs 1.38 trillion, AGR liabilities of Rs 69,020 crore that are due to the government, debt from banks and financial institutions of Rs 6,050 crore and optionally convertible debentures amounting to Rs 1,660 crore.
