In Short:
Telecom company Vodafone Idea’s FPO received a lukewarm response, with only 26% of shares being subscribed. Price band set at Rs 10-11 per share. Raised Rs 5,400 crore earlier this week from institutional investors. Largest ever FPO in Indian market. Plans to raise Rs 45,000 crore for network expansion and 5G rollout. Proceeds to be used for equipment purchase, network expansion, and vendor payments. FPO to close on April 22.
Vodafone Idea’s Follow-On Offering Receives Modest Response
In a bid to alleviate its debt burden, Vodafone Idea Ltd launched a Rs 18,000 crore follow-on offering (FPO) which has received a tepid response. As of Thursday, only 26% of the shares on offer were subscribed by investors, amounting to 331.24 crore out of the total 1,260 crore shares available.
Investor Breakdown
- Qualified institutional buyers: Subscribed to 61% of their 360 crore shares reserved
- Non-institutional investors: Subscribed to 28% of the 270 crore shares earmarked for them
- Retail investors: Subscribed to only 6% of the 630 crore shares allocated to them
The shares are being offered in a price range of Rs 10-11 per share, lower than the closing price of Rs 13.20 on Thursday.
The FPO, scheduled to close on April 22, aims to raise substantial funds for Vodafone Idea to enhance its competitive position in the Indian telecom market. The company plans to utilize the funds for improving its 4G services, rolling out 5G, and settling vendor dues.
Utilization of Proceeds
- Network Expansion: Rs 12,750 crore earmarked for purchasing equipment, setting up new 4G and 5G sites
- 5G Network: Rs 5,720 crore allocated for setting up the 5G network
- Spectrum Payments: Rs 2,175.31 crore for making deferred payments for spectrum
This FPO, the largest in Indian market history, follows a recent Rs 5,400 crore share sale to institutional investors. The success of this fundraising effort is crucial for Vodafone Idea to gain ground on its competitors, Reliance Jio and Bharti Airtel.
It marks a significant step for the company towards strengthening its financial position and supporting future technological advancements in the telecom sector. The outcome of this offering will determine Vodafone Idea’s ability to navigate the evolving landscape of the industry.
