Vodafone Idea board to meet on October 21 to consider fundraising via convertible debentures

• Vodafone Idea’s board of directors is scheduled to meet on October 21 to consider raising funds.
  
• The meeting comes at a crucial time, when Indus Towers, one of the main tower providers of Vodafone Idea, has demanded the telco pay up its dues.
  
• Shares of the telco gained after the fundraising announcement.
  

Vodafone Idea’s board of directors will meet on October 21 to consider fundraising via convertible debentures, the telco said in an exchange filing, without divulging details about the quantum of the fund raise.

"We wish to inform you that a meeting of the board of directors of the company is scheduled to be held on October 21, 2022, inter-alia, to consider and evaluate a proposal for issuance of debenture securities convertible into equity shares on a preferential/private placement basis to a vendor," Vodafone Idea said in its exchange filing.

Convertible debenture is a long-term debt that can be converted into equity shares after a specified period.

Vodafone Idea’s latest attempt to raise funds is for investing in its network and also to pay its dues to its service providers, including Indus Towers – a tower company in which rival telco Bharti Airtel holds a 47.76% stake. Notably, Vodafone Idea’s parent company, Vodafone Group Plc, also holds a 21.05% stake in Indus Towers.

Vodafone Idea reportedly owes over ₹7,000 crore to Indus Towers. The tower company has asked the telco to clear dues or risk losing access to towers from November.

Reacting to the news, Vodafone Idea’s shares rose 1% to ₹8.55. This is, however, still below the ₹10 level that the government is reportedly waiting for before converting its debt to equity, as part of the telecom relief package announced in 2021. The package gave telcos an option to go for a four-year moratorium on their adjusted gross revenue (AGR) and spectrum dues, among other things.

The tide that won’t stem

In 2022 so far, Vodafone Idea has lost over 12 million subscribers, according to data from telecom regulator TRAI. Its rivals Reliance Jio and Airtel continue to add subscribers at a rapid pace.


While the telecom sector is expected to ring in stability in Q2, analysts suggest Vodafone Idea will continue to grow weaker.

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