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Friday, May 24, 2024

Vodafone Idea plans smart turnaround under Birla leadership

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In Short:

Vodafone Idea (Vi) recently completed its largest FPO in India, raising Rs 18,000 crore. The FPO was oversubscribed, showing confidence in Vi’s role in the digital market. Chairman Kumar Mangalam Birla thanked the government for reforms and support. The raised funds will be used for network upgrades, not debt repayment. Vi aims for a smart turnaround with continued support. The two promoters have invested heavily in the Indian telecom industry.

Vodafone Idea Concludes Rs 18,000 Crore FPO

Vodafone Idea (Vi), the third-largest telecom operator in the country, recently concluded its Follow-on Public Offer (FPO) of Rs 18,000 crore. This FPO is the largest in the country to date and was subscribed 7 times overall, with institutional investors subscribing around 19 times. Kumar Mangalam Birla, Chairman of the Aditya Birla Group (ABG) and Vodafone Idea Limited (VIL), mentioned that the response to the FPO showcases the potential of the India digital story and Vodafone Idea’s role in it.

Birla expressed his gratitude towards the Indian government for addressing liquidity and litigation issues for the sector. He specifically thanked Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman, and Telecom Minister Ashwin Vaishnaw for their commitment to maintaining a competitive 3-player market in India.

Usage of Raised Funds

The funds raised through this FPO will be utilized for capital expenditure rather than debt repayment. Birla confirmed that the funds are earmarked for a significant network upgrade across key markets to enhance operational efficiency.

Birla also mentioned that with the support of banks and the recent fundraise, Vodafone Idea is on track for a turnaround, marking the beginning of Vodafone Idea 2.0. The revitalization of Vodafone Idea is deemed crucial for India.

Promoter Investments and Future Plans

Vodafone Group and Aditya Birla Group have collectively invested around Rs 1,70,000 crore in the Indian telecom industry. Additionally, Vi received Rs 2,000 crore from an Aditya Birla Group Entity. The telco has raised about Rs 20,000 crore through equity instruments and has plans to raise another Rs 25,000 crore through debt.

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