Even a big fundraise is not helping Vodafone investors as Russia-Ukraine conflict takes the wind out of global markets

Even a big fundraise is not helping Vodafone investors as Russia-Ukraine conflict takes the wind out of global markets
Finally, some good news for Vodafone Idea investorsBCCL
  • Vodafone Idea can heave a sigh of relief after finally succeeding in raising funds.
  • The telco has raised ₹4,500 crore from its promoters, and has an option to raise an additional ₹10,000 crore later.
  • This comes after the Vodafone Group sold a 7.1% stake in Indus Towers, raising over ₹4,300 crore in the process.
Vodafone Idea has finally kickstarted its long-awaited fundraising plan, with the company’s promoters – Vodafone Group Plc., and Aditya Birla Group, pitching in with ₹4,500 crore. Interestingly enough, Vodafone Group had earlier refused to infuse funds in the telco for several months.

Ahead of the fundraising announcement on March 3, the company’s shares ended the day up by over 6%. This should provide some respite to the company’s investors, who have seen their investment erode by a third since the beginning of 2022.

However, Vodafone Idea’s shares were down by 3.6% as of 9:40 a.m., today, March 4, as the Russia-Ukraine conflict continues to worsen.

Even a big fundraise is not helping Vodafone investors as Russia-Ukraine conflict takes the wind out of global markets
Vodafone Idea share price in 2022BSE / Business Insider India / Flourish

The company’s board has room to raise an additional ₹10,000 crore via equity and debt instruments, including depository receipts and foreign currency convertible bonds.

This comes after the Vodafone Group sold a total of 7.1% stake in tower company Indus Towers – it raised ₹1,442 crore via a 2.4% stake sale via a block deal, and another ₹2,900 crore by selling the balance 4.7% stake to Bharti Airtel, a rival of Vodafone Idea.

Out of the ₹4,500 crore, 75% of the funds will come in from the Vodafone Group, with the Aditya Birla Group contributing the remaining 25%.

$IDEA.NSEFundamental Development :Rs 14,500 cr fund-raising planIt will raise Rs 4500 crore via a preferential share issue at Rs 13.30 a share which is quite above current market priceTechnicals :Stock is at demand zone as well as at support level of 200 Days SMAWe can expect bounce back from this level10.35 Seems like good accumulation zoneBullish trend will start above 11.45 closing

— (@CuriousCommunity) March 04, 2022

What does it mean for users?

The fundraise should help Vodafone Idea work towards its plans to raise capital expenditure to the tune of $2 billion (approx. ₹15,000 crore).

This will primarily be aimed at boosting the telco’s network capacities, improving the technology backend and participating in the upcoming 5G spectrum auction, expected to happen sometime in the first quarter of 2022.


Fundraise comes soon after Vodafone Idea opted for AGR dues moratorium

The long-awaited fundraise comes soon after the ailing telecom operator opted for the Indian government’s adjusted gross revenue (AGR) dues moratorium, allowing it to obtain a much-needed cash flow relief.

According to the AGR and spectrum dues case in the Supreme Court, the total demand stood at ₹58,254 crore of which Vodafone Idea has already repaid ₹7,854 crore. Its current outstanding is ₹50,339 crore.

More recently, the telco also applied to the Department of Telecommunications (DoT) to release its bank guarantees worth ₹15,000 crore, and also freeze the calculation of interest on its AGR dues on the date of its application for moratorium.


Vodafone Idea reportedly wants the government to release ₹15,000 crore bank guarantees ahead of its fundraising plan

Vodafone Idea’s British parent could infuse capital in the telco after refusing to do so for several months

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