Cash-strapped telecom operator Vodafone Idea Limited (VIL) has announced a Follow-on Public Offer (FPO) aiming to raise ₹18,000 crore. This crucial fundraising effort, announced on April 10, 2024, comes at a critical juncture for VIL, aiming to bolster its financial standing and fuel future growth in India’s fiercely competitive telecom market.

Navigating a Challenging Landscape

VIL, formed by the merger of Vodafone India and Idea Cellular in 2018, faces a significant financial burden. The intense competition in the Indian telecom sector, coupled with a hefty Adjusted Gross Revenue (AGR) liability, has strained their resources. The AGR dues, a government levy based on revenue generated from telecom services, have significantly impacted VIL’s financial health. This FPO serves as a strategic step towards addressing these challenges and securing a more stable financial footing.

FPO Details and Investment Opportunities

The FPO is scheduled to open for subscription on April 18, 2024, and close on April 22, 2024. The price band for the FPO has been set at ₹10-₹11 per share, offering potential investors an opportunity to participate in VIL’s future. The success of the FPO depends on attracting both institutional and retail investors, with a focus on garnering strong participation from existing VIL shareholders.

Use of FPO Proceeds

The company will use the funds raised from the purchase of equipment for the expansion of its network infrastructure by setting up new 4G sites, expanding the capacity of existing 4G Sites and new 4G sites and setting up new 5G sites. A significant portion of the funds would also be used for the payment of certain deferred payments for spectrum to the DoT and the GST thereon. Furthermore, the company intends to utilise the funds for debt reduction and general corporate purposes, ultimately aiming to achieve financial stability and long-term sustainability.

About Vodafone Idea Limited

Vodafone Idea is one of the leading telecom service providers in India. It offers Mobility and Long-Distance services and trades handsets and data cards.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.