FPO marks start of Vodafone Idea 2.0, will stage 'smart turnaround', says Kumar Mangalam Birla

Kumar Mangalam Birla thanks government for its commitment to preserving a competitive three-player telecom market

The successful completion of the Rs 18,000 crore follow-on public offer (FPO) marks the beginning of Vodafone Idea 2.0, which will stage a "smart turnaround," Aditya Birla Group chairman Kumar Mangalam Birla said.

The current policy environment encourages investment, innovation and competition, Birla said at Vodafone Idea’s FPO listing on the National Stock Exchange on April 25.

“The emphatic oversubscription of the FPO – with the overall book being subscribed seven times and the institutional book being subscribed 19 times — demonstrates the tremendous potential of the India digital story and Vodafone Idea’s role in it,” Birla said. “I believe that a revitalised Vodafone Idea is important for India.”

The FPO by the third-largest telecom operator in the country was part of a strategy to raise Rs 45,000 crore through a combination of debt and equity.

Vodafone Idea’s journey to this point has been shaped significantly by the government's reform package, which was nothing short of transformational for the entire sector, he said, as he highlighted the government's support in preserving a competitive three-player market.

The government introduced reforms for the telecom sector in September 2021 aimed at easing finances for operators. The reform package includes measures related to calculation of adjusted gross revenue, spectrum and foreign direct investment.

Vodafone Idea competes with Reliance Jio and Bharti Airtel, which have set up 5G networks.

The Aditya Birla Group had remained committed to this sector for over two and a half decades now, Birla said.

“Along with our partner, Vodafone Group, we have invested around Rs 1,70,000 crore in the Indian telecom industry. Before this FPO, in the last five years, out of Rs 30,000 crore raised by the company, more than 75 percent has come from the two promoter groups,” Birla said.

The Aditya Birla Group invested over Rs 2,000 crore in the FPO, which was the largest in India.

“This continued commitment stems from our belief in the promise of the India digital story,” he said.

The funds raised are earmarked for expanding the operator's network, including the addition of 4G and 5G sites. Birla said this growth capex would pave the way for a network and technological upgrade across key markets.

“This, in turn, will enhance operational efficiencies and lead to better performance. The cycle of investment will trigger the cycle of growth. On the back of this fundraise and continued support from banks, Vodafone Idea will stage a smart turnaround. This moment, in some ways, marks the beginning of Vodafone Idea 2.0. I believe that a revitalised Vodafone Idea is important for India," he said.

Birla said many marquee investors participated in the equity issuance, a testament to the government’s vision of a digital India. Among the anchor investors were GQG Partners, Fidelity and Motilal Oswal.

“The robust engagement from both foreign and domestic investors is heartening. Notably, the full subscription of the retail portion is truly commendable, given the sheer scale of the offer,” he said.

Birla said Vodafone Idea is a “national asset” with 215 million users, about 8000 MHz of spectrum and a network that spans from Kashmir to Kanyakumari.

“India’s digital economy is booming, and robust telecom networks are crucial to support this growth. A nation of 1.4 billion people deserves three private telecom players… Amidst storms of uncertainty, they have remained undeterred, day in and day out. It won’t be an exaggeration to say —What a team, Sirjee!” he said, alluding to the tagline of an Idea advertisement.

Following a recent conversion of debentures, the company's gross debt stood at Rs 2 lakh crore, from Rs 2.38 lakh crore earlier. Vodafone Idea recorded a net loss of Rs 29,371 crore in FY23.