HIGHLIGHTS
- On March 26, a general meeting will be conducted to ratify the capital increase. VIL and Bharti Airtel have agreed to sell 127.1 million shares in Indus Towers.
- VIL is owned by Vodafone Group, which owns more than 44 percent of the company.
Vodafone Idea (VIL), a debt-ridden telecom operator, announced on Thursday that its board of directors has authorised funding up to Rs. 14,500 crore, including Rs. 4,500 crore from parent firms Vodafone and Aditya Birla Group. A total of Rs. 10,000 crore would be raised in one or more tranches using stock or loan instruments.
The business stated in a regulatory filing that the board of directors has approved the issuing of up to 338.3 crore equity shares with a face value of Rs. 10 each at an issue price of Rs. 13.30 per equity share for an aggregate consideration of up to Rs. 4,500 crore.
These shares will be distributed to Euro Pacific Securities Limited, Prime Metals Limited (both Vodafone Group firms and the company's sponsors), and Oriana Investments Private Limited.
In a separate filing, British telecom giant Vodafone Group stated that it aims to contribute up to Rs. 3,375 crore (USD 450 million) to VIL's capital increase from net proceeds from the sale of primary shares in Indus Towers.
"Vodafone has the option to contribute any residual revenues from the sale of the Primary Shares to VIL as capital before 15 July 2022," Vodafone stated. Vodafone noted that any residual revenues not contributed to VIL will be available to Indus until November 19, 2022 to ensure the Indian telecom operator's commitments under the Master Services Agreements.
Vodafone Group announced on February 24, 2022, the successful sale of 63.6 million shares in Indus Towers via an expedited book build offering for Rs. 226.84 per Indus share. The net proceeds from the placement were about Rs 1,420 crore.
Following this, Vodafone reached an arrangement with Bharti Airtel (one of Indus' current sponsors) to sell an additional 127.1 million shares in the telecom tower firm. In the meanwhile, Vodafone Idea announced that an extraordinary general meeting will be conducted on March 26, 2022, to approve the capital raising.
The VIL board of directors has authorised the issuing of equity shares or securities convertible into equity shares, among other instruments, in order to fund up to Rs. 10,000 crore.
The business will also consider issuing Global Depository Receipts (GDRs), American Depository Receipts (ADRs), Foreign Currency Convertible Bonds (FCCBs), convertible debentures, warrants, and a composite issuance of non-convertible debentures and warrants to raise the funds.
According to the VIL filing, such funding would take conducted in one or more tranches by private placement, qualified institutional placement, or any other acceptable form. Birlas owns more than 27 percent of VIL, while Vodafone Group owns more than 44 percent.
Telecom service providers, particularly VILs, received a boost last year when the government approved a massive relief package that included a four-year exemption from paying statutory dues, permission to share scarce airwaves, a change in the definition of revenue on which levies are paid, and 100% foreign investment through the automatic route.
The government also provided telecommunications the option of converting the moratorium period's interest into equity.
As a result, Vodafone Idea has decided to pay interest dues of around Rs 16,000 crore through preferential share. As a consequence, the government will own 35.8 percent of the corporation.
When asked lately about the status of Vodafone Idea's equity conversion request, Telecom Minister Ashwini Vaishnaw told PTI: "We've enlisted the help of experts to assess the situation as a whole. Because it is largely a financial choice, DIPAM has an appropriate procedure in place (Department of Investment and Public Asset Management). They're going to select a transaction advisor." Transaction consultants are legal and financial professionals who examine a deal's value, equity structure, and other issues. The procedure might be done in a few months.
Over the last several months, Indian telecom providers have been beefing up their armament as the industry prepares for the launch of 5G services, which will bring in ultra-high speeds and herald in new-age services and business models.
Even while regulator TRAI finalises its recommendations on spectrum pricing and other issues, the Telecom Department is hard at work laying the basis for radiowave auctions.
After the PMO pushed it to strive for the initial deployment of 5G by August 15, 2022, and to examine the prospect of receiving essential views from the regulator before March, the DoT approached TRAI, demanding that it accelerate spectrum recommendations.
