Vi board approves raising ₹2,458 cr via share sale to Nokia, Ericsson

Cash-strapped telecom player Vodafone Idea’s (Vi) board today approved a new fundraising programme via the preferential allotment of equity shares of up to ₹2,458 crore. With this equity issuance, VIL has raised a total ₹24,000 crore of equity including conversion of 1,440 optionally convertible debentures in Mar’24 by ATC India, FPO issue in Apr’24 and preferential issue to promoters in May’24.

Vi, in an exchange filing, says the preferential allotment of 166 crore equity shares of face value of ₹10 each will be done at an issue price of ₹14.80 per share, for ₹2,458 crore to two of its key vendors – Nokia Solutions and Networks India Private Ltd (“Nokia”) and Ericsson India Private Ltd (“Ericsson”).

The preferential allotment price is “higher by 35%” than the FPO price, says Vi in an exchange filing, adding that it comes with a lock-in period of 6 months.

Nokia and Ericsson will participate for up to ₹1,520 crore and ₹938 crore, respectively. The investment will require approval by VIL shareholders at the EGM on July 10, 2024. “Nokia and Ericsson both have a long-term partnership with VIL, as key suppliers of network equipment, and this preferential allotment will enable VIL to clear part of their outstanding dues. It further bolsters VIL’s capex rollout for building a top quality 4G & 5G network to contribute towards India’s digital transform,” the company says.

Vi says with a subscriber base of 212.6 million as of March 31, 2024, it is well positioned to effectively compete in the market. Akshaya Moondra, CEO, Vodafone Idea, says VIL is all set to participate in the industry growth with the right investments to expand its 4G coverage and offer a 5G experience to its customers while remaining focused on its execution capabilities. “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.”

Post the preferential issuance, the shareholding of Nokia and Ericsson in the company will be 1.5% and 0.9% respectively. The promoter (ABG and Vodafone) shareholding will stand at 37.3% and the shareholding of the Government of India will stand at 23.2%, while the balance of 37.1% will be public shareholding.

Additionally, in line with its stated fund-raising roadmap, the company is in active discussions with its lenders to raise debt funding to the tune of ₹25,000 crore. “This comprehensive fundraise (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.”

The company says it will enable VIL to participate in the large and significant opportunities offered by the Indian wireless sector.

In April 2024, the company raised funds worth ₹18,000 crore via a follow-on public offer (FPO). In contrast to the broader market, the company shares closed 2.25% down at ₹16.07 on the BSE on Thursday.