Vodafone Idea Plans To Issue Shares Worth $294 Mln To Two Vendors To Pare Debt

Telecom operator Vodafone Idea Ltd. (VIL) plans to issue shares worth up to 2,458 crore rupees ($294 million) to two of its key vendors to clear part of their outstanding dues.

The company’s board today approved the preferential allotment of up to 166 crore equity shares to Nokia Solutions and Networks India Private Ltd. and Ericsson India Private Ltd., in one or more tranches, Vodafone Idea said in a stock exchange announcement.

The preferential allotment, subject to approval of shareholders and regulatory authorities, will be done at an issue price of 14.80 rupees apiece.

THE RATIONALE

The Indian telco said Nokia and Ericsson both have a long-term partnership with the company as key suppliers of network equipment, and this preferential allotment will enable Vodafone Idea to clear some of their outstanding dues.

The company, which didn’t disclose the vendors outstanding dues, also said the preferential issue will further bolster Vodafone Idea’s capital expenditure rollout for building a “top quality” 4G and 5G networks.

“As VIL embarks on its growth journey, support from key stakeholders is critical and the agreement with Nokia and Ericsson reaffirms these vendors as long-term partners of the company and sets the stage for the next phase of our growth,” Vodafone Idea Chief Executive Officer Akshaya Moondra said in a statement.

Vodafone Idea -- an Aditya Birla Group and UK-based Vodafone Group partnership – had a subscriber base of 212.6 million at the end of March 2024. The company competes with Bharti Airtel Ltd. and Reliance Jio Infocomm Ltd., a subsidiary of Reliance Industries Ltd.

ALLOTMENT INTRICACIES

The company’s board approved preferential allotment of as much as 102.70 crore shares to Nokia at 14.80 rupees apiece, aggregating to 1,520 crore rupees.

The board also gave its nod to issue up to 63.38 crore shares to Ericsson at similar price, aggregating to 938 crore rupees.

The preferential allotment comes with a lock-in period of six months and Vodafone Idea will seek shareholders’ approval at an extraordinary general meeting on 10 July.

Following the preferential issuance, Nokia and Ericsson will own a 1.5% and 0.9% stake in the company, respectively. The promoters (Aditya Birla Group and Vodafone Group) will hold a 37.3% stake and the Indian government will own a 23.2% stake, while the balance 37.1% will be owned by the public.

Vodafone Idea also said the company is in active discussions with its lenders to raise debt funding to the tune of 25,000 crore rupees.

Note: $1 = 83.5317 Indian rupees

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