Vodafone Idea aims to raise US$2.1 billion in FPO this week

Vodafone Idea aims to raise US$2.1 billion in FPO this week

Indian telco Vodafone Idea reportedly plans to raise as much as Rs180 billion (just over US$2.1 billion) this week in what is expected to be India’s biggest follow-on public offering (FPO) as it seeks to pay off debts and get back in the 5G game.

According to a statement from Vodafone Idea on Friday, its board has approved the launch of the FPO, with shares priced at Rs10-11 each. That represents a “discount of around 15% compared to last closing price of Rs12.95,” the statement said.

The FPO is scheduled to kick off this Thursday April 18, and run until April 22. According to ETTelecom, if the FPO goes as planned, it will be the largest in India since July 2020, when Yes Bank’s FPO raised Rs150 billion.

Vodafone Idea plans to follow the FPO by raising another Rs25 billion via debt financing. Earlier this month, shareholders approved a plan revealed in late February to raise Rs20 billion through equity and equity-linked instruments.

Vodafone Idea – frequently described as “cash strapped” – needs the funding to pay off debts, update its 4G infrastructure and make good on plans to launch 5G services in the second half of this year. According to its latest financial figures for the fiscal third quarter, Vodafone Idea’s net debt widened to Rs2.14 trillion in the fiscal third quarter, while its bank debt is around Rs45 billion.

If everything pans out, Indian tower company Indus Towers is expected to be a major beneficiary of Vodafone Idea’s fundraising blitz.

A separate report from ETTelecom said that the fundraising plan would not only enable Vodafone Idea to pay its debts to Indus, but also give Indus between 40,000 and 45,000 new tenancies as the telco expands its network. A research note from Jeffries estimated that Indus could also post an 8% CAGR boost in operating income through FY24-27 as a result, the report said.

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