Vodafone Idea bid to take on Jio
“The board has considered and approved the offer and issue of fully paid-up and/or partly-paid up equity shares of the company and/or other securities convertible into equity shares of the company, including
but not limited to, compulsorily convertible debentures, for an amount aggregating Rs 25,000 crore by way of a rights issue to existing eligible equity shareholders,’’ Vodafone Idea said.
Besides, the promoter shareholders are willing to subscribe to a part or the whole amount of any unsubscribed portion of the rights offer, the company said.
While the announcement came towards the close of market hours, the Vodafone Idea stock settled with gains of almost a per cent at Rs 33.75 on the BSE on Wednesday. Close to six lakh shares were transacted.
Meanwhile, tower companies Bharti Infratel and Indus Towers have sought exit charges following the Vodafone-Idea merger.
The amalgamation had led to two tenancies on a single tower being converted into one. Vodafone Idea on Wednesday told the bourses in a clarification that negotiations were on in this regard.
Before the merger, both the entities had tenancies on the same tower of infrastructure service providers, including Indus Towers and Bharti Infratel.
“After the merger, these two tenancies on a single tower have been converted to a single tenancy… Both Bharti Infratel and Indus have raised demands for exit charges on the company on account of this change and for which the company is in negotiations with them,” the company said in the filing.
The board of Vodafone Idea Cellular on Wednesday approved a Rs 25,000-crore rights issue that will give the country’s largest telecom operator by subscribers more money muscle to take on rival Reliance Jio.
The promoter shareholders will together infuse over Rs 18,000 crore in the proposed rights. While Vodafone will invest up to Rs 11,000 crore, the Aditya Birla group will put up to Rs 7,250 crore in the venture.
Vodafone Idea is also planning to sell its over 11.5 per cent stake in Indus Towers.
In a communication to the bourses, Vodafone Idea said the board had authorised the capital raising committee of the company to decide on the details of the rights issue, including the instrument, issue price, rights entitlement ratio and its timing.
Vodafone holds a 45.1 stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group controls 26 per cent and Idea shareholders own 28.9 per cent.
The mega merger was announced a few months after the entry of Reliance Jio, whose free calls and cheap tariff adversely affected the bottomline of the entire industry.
Jio has 280 million subscribers as of December 2018. During the third quarter of this fiscal, the Reliance Industries arm had clocked a net profit of Rs 831 crore, which marked an increase of 22 per cent on a sequential basis.
Vodafone India had suffered a loss of Rs 4,974 crore in the second quarter of this year.