Vodafone Idea (Vi) is gearing up to launch a follow-on public offer (FPO) to raise Rs 18,000-20,000 crore by the middle of the next week, sources have told Moneycontrol.
The debt-laden telecommunications company has enlisted Jefferies, SBI Caps and Axis Capital as lead managers for the FPO, the largest offerings of its kind in India. However, none of the banks are underwriting the issue, sources said.
Yes Bank's Rs 15,000 crore-FPO has been the largest such share sale in the Indian market, so far.
Adani Enterprises Rs 20,000-crore FPO in January 2023 would topped it but the Gautam Adani flagship company called off the offer after the Hindenburg Research report alleged several governance lapses at the Adani group.
Vodafone Idea has secured commitments from anchor investors, including both foreign and domestic institutional investors, sources said, signalling initial support for FPO.
The fundraise has the backing of the government of India, which is the largest sharehodler in the company at 33%, sources said, adding that some investors reached out to the government before committing to invest in the FPO.
Emails sent to Vi and SBI Capital remained unanswered, while Jefferies and Axis Capital declined to comment.
The move comes amid intense competition in and financial challenges in
the telecom sector.
Vodafone Idea has been grappling with a significant debt burden and operational losses, exacerbated by regulatory issues, resulting in a decline in its subscriber base and market share.
On April 5, Vodafone Idea’s board approved the allotment of shares worth Rs 2,075 crore to Oriana Investments Pte Ltd, an Aditya Birla Group entity and part of the promoter group, on a preferential basis.
The issue price is Rs 14.87, higher than the closing price of Rs 13.36 on the BSE on Friday.
The proceeds from the offering are expected to provide much-needed liquidity and support to the company.
According to the Telecom Regulatory Authority of India’s (TRAI) data, Vodafone Idea subscriber base fell by 1 million to 220.5 million in February. The telco has been losing two to six million subscribers every quarter for the past few quarters due to the subscribers moving to other service providers. Vodafone Idea’s overall user base was 215.2 million on December 31.
Industry experts say the telco needs to urgently invest in infrastructure to improve the quality of service and retain subscribers.
At 11.48 pm, the Vodafone Idea stock was trading at Rs 12.65 on National Stock Exchange, down almost 2 percent from the previous close.
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