Vodafone-Idea secures $1 billion in equity commitments from anchor investors
Vodafone Idea is making strides in its financial restructuring efforts, having secured over $1 billion (Rs. 8,200 crore) in equity commitments from anchor investors, as it aims to raise Rs. 45,000 crore in equity and debt. The telecom giant has been working with a group of investment banks to develop efficient funding structures for the planned fundraising. Various options are being considered, such as a rights issue, preferential allotment, or a follow-on public offering.
Exploring various fundraising avenues
The company's fundraising strategy is being optimized to suit the needs of both incoming investors and existing shareholders. A banker familiar with the matter explained: "A preferential allotment will allow it to raise funding through a hybrid structure such as warrants, a rights issue or FPO will allow Vodafone Idea to price new shares at a level deemed reasonable by incoming investors as well as existing shareholders."
Meetings with foreign investment banks
In recent weeks, Vodafone Idea has met with several foreign investment banks and requested presentations on their fundraising strategies. According to a person familiar with the situation, "In the interactions with lenders, the company has informed them that the equity commitment is in place from a clutch of marquee anchor investors, which will be the basis on which the debt component will be determined."
Significance for telecom industry
The success of Vodafone Idea's fundraising efforts is crucial not only for the company's future but also for the broader telecom industry. TRAI data reveals that Vodafone Idea lost 1.7 million subscribers in November 2023 and has been experiencing a decline of two to six million subscribers per quarter. To prevent further erosion of its customer base, the company must secure sufficient funds and focus on key circles to increase average revenue per user (ARPU).
