In a determined move to expand its capital, Vodafone Idea has publicized plans to marshal up to 180 billion rupees ($2.16 billion) via India’s largest FPO (follow-on public offering). This capital enhancement approach allows an already publicly listed firm to issue additional shares. Slated between April 18 and 22, the shares will go for a modest price of 10 rupees ($0.12) per share. In reaction to this announcement, Vodafone Idea’s share price slightly retreated, dropping 2.3% to settle at 12.65 rupees ($0.15).
Notably, Vodafone Idea occupies the third spot in India’s mobile operator domain, determined by subscriber figures. Hard hit by stiff competition, the firm has been wrestling with a shrinking market share, bottoming at 18.93% in February 2022, and a rising debt profile. The main sources of this rivalry are Bharti Artel and Reliance Jio, the latter, since its debut in 2016, has dramatically altered the Indian telecoms sector competitive dynamics.
The culmination of the merger between Vodafone’s Indian unit and Aditya Birla Group’s Idea Cellular in 2018 saw the emergence of Vodafone Idea, which, despite its auspicious start, has been posting losses quarter after quarter. To rescue the telecom firm, the Indian government stepped in, converting owed interest into equity, which technically made it the company’s largest shareholder with a 33.1% stake as of February 2021.
The weight of its substantial debt has impeded Vodafone Idea’s capacity to invest in network upgrades, meaning it remains the only telecom operator in India yet to roll out 5G services. Eyes are, however, on it to launch the country’s first commercial 5G offerings later this year.
CEO Akshaya Moondra, while delivering an earnings call in January, noted the urgent need for industry movement towards monetization, considering the heavy investments made without corresponding returns. He affirmed they would have a better understanding of the monetization front in about six to seven months, coinciding with their projected 5G launch timetable.
