Vodafone Idea promoters to invest Rs 18,250 cr via rights issue

Vodafone Idea requires cash to expand its 4G capacity

Vodafone will invest Rs 11,000 cr into its Indian subsidiary Vodafone Idea, while its co-promoter Aditya Birla Group will chip in Rs 7,250 cr, the company said today.

In total, Vodafone Idea plans to raise Rs 25,000 cr from all its shareholders by selling shares.

In case any of the existing shareholders waives their right to invest in the company, the promoters will chip in the money in exchange for shares, the company said.

In a meeting, the company director board agreed to conduct the Rs 25,000 cr rights issue.

A rights issue is an issue of fresh shares to all existing shareholders in proportion to their current shareholding.

“The Promoter shareholders (Vodafone Group and Aditya Birla Group), have re-iterated to the Board that they intend to contribute up to Rs.11,000 crore and up to Rs.7,250 crore respectively as part of such Rights Issue.

“Further, the Promoter shareholders have indicated that in case the Rights Issue is undersubscribed, each of the Promoter shareholders reserves the right to subscribe to part or whole amount of the unsubscribed portion, subject to applicable,” the company said.

The rights issue could change the shareholding structure of the company by increasing the promoter shareholding.

As of December end, Indian promoters, including Kumar Mangalam Birla, held 26.55% of the company’s shares, while foreign promoters, including Vodafone India, held 44.78% of the company’s shares.

The fund-raising move comes in the wake of higher capital expenditure requirement in the competitive telecom market of India.

Vodafone Idea is currently engaged in the roll-out of its high-speed 4G network in the country to compete better with 4G market leader Reliance Jio and Bharti Airtel.