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Vodafone Idea’s ₹25,000-cr rights issue opens on April 10

Rajesh Kurup Mumbai | Updated on April 10, 2019

While Vodafone Group will infuse up to ₹11,000 cr, AB Group will invest ₹7,250 cr: CFO

Vodafone Idea’s ₹25,000-crore rights issue, the largest in the country, will open on Wednesday, even as the telecom service provider is readying to monetise its tower and fibre assets.

The rights issue, wherein the promoters (Vodafone Group and Aditya Birla Group) will infuse up to ₹18,250 crore, will close on April 24.

“With the two companies coming together, we got a very strong set of assets, and we intend to bring the companies together quickly, in turn, enhancing coverage and customer experience. In order to do that, we needed the funding, for which the rights issue is an important step,” Vodafone Idea Chief Executive Officer Balesh Sharma told BusinessLine in an interaction.

The issue comprises up to 2,000 crore shares at ₹12.50 a share, totalling ₹25,000 crore for shareholders of record date April 2, 2019.

“The Vodafone Group will infuse up to ₹11,000 crore and Aditya Birla Group will put in up to ₹7,250 crore, which is 73 per cent of the rights issue,” Akshaya Moondra, Chief Financial Officer at Vodafone Idea told BusinessLine.

Integration

Kotak Mahindra Capital Company, DSP Merrill Lynch Ltd, Morgan Stanley India Company, HDFC Bank and SBI Capital Markets are the lead managers to the rights issue.

The company intends to build a war chest to accelerate integration of its operations (Idea and Vodafone), prioritise investments in profitable areas and focus on increasing average revenue per user (a financial metric for a telecom company) and focus on increasing business.

Vodafone India and Idea Cellular, which had announced their merger last year, have already integrated 9 of the total 22 radio networks.

“We are moving faster than initially estimated on integration and are on track to deliver our synergy targets.

“The integration process is also very well on track,” Sharma added.

Monetisation

Apart from the rights issue, the company is looking at the monetisation of fibre assets and its stake in Indus Towers (a joint venture between Bharti Airtel, Vodafone and Idea) to create a long-term war-chest.

“We have said that we want to monetise our fibre portfolio and for that we are shifting our fibre assets into a wholly-owned subsidiary and we are looking for prospective investors. The monetisation will be basically driven by the fact that we continue to be one of the users with a sale and lease-back arrangement,” Moondra said.

The combined portfolio of 1.56 lakh route km of fibre is being moved to Vodafone Tower. The company is looking largely at private equity investors for its fibre assets.

11% stake in Indus Towers

On the tower front, the company holds an 11.15 per cent stake in Indus Towers, which is being merged with Bharti Infratel.

When the merger gets completed, we will have the ability to cash it out Moondra added.

Published on April 09, 2019

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