Vodafone Idea gains 7% on plans to raise capital for 5G rollout

In February, the Centre had decided to convert adjusted gross revenue (AGR) dues of the company of Rs 16,133.3 crore into equities and become its largest shareholder.

Vodafone Idea shares rose by 7 percent on May 11 after reports that the company is set to reveal a revival plan within a month, following the Indian government's acquisition of equity in the struggling telecom company.

The telecom secretary, K. Rajaraman, mentioned in an interview with Mint that the company is in talks with financial institutions to raise capital for its 5G rollout plans, and the return of Aditya Birla group chairman Kumar Mangalam Birla to the company's board is a positive sign.

"We keep getting monthly reports on their subscriber base and other parameters, but what we want them to do is to come back with resources – equity and debt – and we're awaiting a final communication from them. And now that Mr Birla is back on the board, I'm hopeful they will revert to us soon with their plan," Rajaraman said in the interview.

In February, the Centre had decided to convert adjusted gross revenue (AGR) dues of the company of Rs 16,133.3 crore into equities and become its largest shareholder. As of September 2022, the company had a debt of Rs 2.2 trillion.

The government's aim is to ensure the revival of Vodafone Idea and maintain competition in the telecom sector, the telecom secretary said. The government is preparing for the next spectrum auction in the second half of FY24, which may include unsold spectrum from previous auctions and new bands.

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“We have some unsold spectrum already, for instance, in the 600MHz band. In addition to that, there are some candidate bands that can be introduced. We are in the final stages of discussions, and we may make a reference to TRAI (Telecom Regulatory Authority of India) within a month or two," Rajaraman said.

Vodafone's market cap has declined over 16 percent in the last six months, but has gained over 17 percent in the past month. At 12.31 p.m., the scrip was trading 5.93 percent up on the NSE at Rs 7.15 with the benchmark Nifty trading 0.048 percent higher at 18,323.90 points.