Even though the promoters of Vodafone Idea would infuse Rs 4,500 crore into the company, only Rs 1,125 crore can be utilised by the telco as the remaining amount will be used to clear dues of Indus Towers.
According to the company, with the preferential issue, Rs 3,375 crore of equity infusion will be done by Euro Pacific Securities and Prime Metals (Vodafone Group) while Rs 1,125 crore will come from Oriana Investments (Aditya Birla Group).
“Subscription monies received from Euro Pacific Securities and Prime Metals would be used for making payments due to Indus Towers Limited under the terms of the master service agreements executed between the company and Indus for the provision of passive infrastructure services,” Vodafone Idea said in a notice for its extraordinary general meeting on Saturday. The company further said subscription money received from Oriana Investments will be used towards general corporate purposes.
Post the preferential issue, the shareholding of Vodafone Group will increase to 47.61% from 44.39% while that of Aditya Birla Group will decrease marginally to 27.38% from 27.66%. The overall promoters’ shareholding will be 74.99%.
Analysts have said the funds infusion won’t be enough for Vodafone Idea to tide over the crisis. As the company will be left with only Rs 1,125 crore, the amount won’t be enough to plug the gap between it and peers like Bharti Airtel and Reliance Jio as far as network coverage is concerned.
Apart from the promoters’ funds infusion, the board of the company has also approved raising Rs 10,000 crore through the issuance of equity shares or convertibles securities or other instruments. But analysts said the plans have not yet been firmed up and this is likely just a renewal of board approval for a fund raise of up to Rs 25,000 crore way back in September 2020.
The company would also find it difficult to reverse loss of subscribers as it will remain behind Reliance Jio and Bharti Airtel in terms of pan-India network capabilities and service offerings like providing subsidised devices. Both Airtel and Jio are giving lucrative offers to customers on devices.