Cash-strapped Vodafone Idea moved ahead with a mega funding round, after years of losses, high interest outgo, heavy debt, and announced a fund-raise to the tune of £4.5 billion through a mix of equity and debt as the company looks to work out a revival. It will finally kickstart investments for network expansion and launching highspeed 5G services to compete with bigger rivals Reliance Jio and Bharti Airtel.
The company had been promising to drive in massive investments for last nearly three years, but had failed to materialise a credible and substantial funding round, despite support from govt that went ahead to acquire a 33% equity into the country’s third-largest telco in lieu of future investment payouts towards it.
The board of directors of Vodafone Idea, which is run by a management spearheaded by original promoters Aditya Birla Group (of Kumar Mangalam Birla) and Vodafone of UK - approved the funding where £2 billion will come via a combination of equity and/ or equity-linked instruments. The board also approved an additional £2.5 billion of investment, which would be managed through a combination of equity and debt. “The promoters will also participate in the proposed equity raise, as committed earlier,” it said, without giving out further details.
The move will be a relief for govt, which wants to have a three-player private telco market, as well as millions of Vodafone Idea’s customers (it has nearly 223 million customers despite millions porting out) and financial investors, who had been waiting to see the company get into an investment mode.
“The equity and debt fund-raising will enable the company to make investments towards significant expansion of 4G coverage, 5G network rollout and capacity expansion. These investments will enable the company to improve its competitive positioning and offer a better customer experience,” Vodafone Idea said after end of the board meet.