In Short:
Vodafone Idea (Vi) has secured Rs 5,400 crore from anchor investors as part of a total fundraising of Rs 45,000 crore through a mix of equity and debt. The telecom operator plans to raise Rs 18,000 crore through a Follow-on Public Offer (FPO) to boost its network infrastructure and possibly roll out 5G in the future. Vi is losing subscribers due to inferior networks and aims to compete with Reliance Jio and Bharti Airtel with the funds raised. A tariff hike is expected after the general elections to increase Vi’s average revenue per user.
Vodafone Idea Raises Rs 5,400 Crore from Anchor Investors
Vodafone Idea (Vi), the third-largest telecom operator in the country, has successfully raised around Rs 5,400 crore from anchor investors. The total fundraising effort aims to secure Rs 45,000 crore through a combination of equity and debt. The Rs 5,400 crore was raised by allocating 4,90,90,90,908 equity shares at Rs 11 each to the anchor investors. Vi is also planning to raise Rs 18,000 crore through a Follow-on Public Offer (FPO) scheduled to open on April 18 and close on April 22.
Boosting Confidence and Competitiveness
Additionally, Vi raised Rs 2,075 crore from Aditya Birla Group’s entity Oriana Investments Pte Limited, demonstrating confidence from investors and fund houses. The funds raised will provide Vi with the necessary resources to compete effectively with industry giants like Reliance Jio and Bharti Airtel.
Investing in Network Expansion and 5G
Vi has been losing subscribers due to network quality issues, prompting the need for investment in network infrastructure and potential 5G rollout in the future. The absence of 5G services has led customers to prefer Jio and Airtel, both of which offer unlimited 5G data. Vi’s active subscriber base is currently under 200 million and declining, with the overall subscriber base below 220 million. In contrast, Jio boasts more than 460 million users and Airtel over 380 million.
Future Growth Prospects
A potential tariff hike in the near future is likely to maintain investor interest in Vi’s growth prospects. The fresh funds raised could allow Vi to invest further in network expansion and regain lost market share from competitors. Tariff hikes in the telecom industry are anticipated post general elections, with operators considering up to a 20% increase to boost their average revenue per user (ARPU) – a crucial aspect for Vi’s growth strategy.
