Vodafone Idea, a major player in the telecom sector, witnessed a dip in its stocks following the announcement by its board approving a formidable plan to raise funds amounting to Rs 20,000 crore through equity or equity-linked instruments. The decision prompted a 4.9 per cent decline in Vodafone Idea shares, plummeting to Rs 15.1 each during the initial trading hours on BSE.
Vodafone Idea in a statement revealed, “The Board has greenlit the management to engage various intermediaries, including bankers and counsels, to facilitate the fundraising process. The company is set to convene a shareholder meeting on April 2, 2024, and pending shareholder endorsement, anticipates concluding the equity fundraising in the forthcoming quarter.”
Furthermore, the telecommunications giant disclosed intentions to amass Rs 45,000 crore through a blend of equity and debt.
“By leveraging a combination of equity and debt instruments, we aim to secure approximately Rs 45,000 crores. Presently, our bank debt stands at a modest sum of less than Rs 4,500 crores. The infusion of equity and debt capital will empower the company to undertake substantial efforts, including expansive 4G coverage, the rollout of 5G networks, and bolstering capacity. These strategic investments will fortify our competitive stance and enhance the overall customer experience,” the company elaborated.
The statement asserted the funds would be procured through a mix of equity and/or equity-linked instruments.
In the wake of this development, CLSA has upheld a ‘sell’ rating on Vodafone Idea stock with a target of Rs 5, expressing concerns about potential financial strain in FY26CL when the company faces significant annual spectrum and adjusted gross revenue-related obligations. CLSA noted a decline of 120 basis points in Vodafone Idea’s revenue market share over the past year.
Nomura, similarly, has maintained a ‘reduce’ rating on Vodafone Idea shares, setting a target of Rs 6.5. The financial institution highlighted the importance of attracting external investors, deeming it a pivotal move for the company’s future prospects.
