Vodafone board approves $5.4 billion fundraise, shares dive

The board of Vodafone Idea Ltd has approved plans to raise up to ₹45,000 crore (about $5.4 billion) via debt and equity, the telecom firm informed the stock exchanges on Tuesday.

The company plans to raise ₹20,000 crore (about $2.4 billion) via equity, in which the telco’s promoters are expected to take part. The firm will call a shareholder meeting on 2 April to approve the equity fund raise, it said.

The funds raised will be deployed to expand 4G coverage and rollout its 5G network, in addition to boost capacity, the company said.

Shares of Vodafone Idea dived about 14% from the previous day’s close to ₹13.65 apiece on Wednesday on BSE against a 1% decline in the broader Sensex index to 72,304.88.

The company currently has a debt pile of ₹2.5 trillion.

Vodafone is the only telco that doesn’t offer 5G services to customers. Bharti Airtel and Reliance Jio, the other two telecom operators in India rolled out 5G services last year.

Vodafone lost 1.36 million customers in December to 223 million users at the end of that month, latest subscription data released last week by the telecom regulator showed.

For comparison, Airtel gained 1.85 million customers during the month to 382 million, while Reliance Jio gained about 4 million customers to 460 million customers.

Meanwhile, the company said the proposed fund raise follows a marked improvement in operating metrics.

The company has managed to grow its 4G subscriber base and average revenue per user (Arpu) consecutively for the past 10 quarters. Further, the company remains focused on providing competitive data and voice experience at all locations where it is present,” it said in the statement.

“The company is also steadfast in building a differentiated digital experience, adding several digital offerings in the recent quarters. It has consistently shown an improvement in performance even with limited investments. With the proposed fund raise and the positive operational developments, the company is confident of effectively competing in the market,” it added.