Vodafone group to infuse Rs 436 crore in Vi ahead of India 5G auction

This is the second capital raise by the Indian company in two months after Rs 4,500 crore infusion from its promoters.

Vodafone Group Plc will infuse an additional Rs 436 crore into Vodafone Idea (Vi)  through equity shares or warrants. The fund-raise was approved in a board meeting on Wednesday.

This is the second capital raise by the company in two months after the Rs 4,500-crore infusion by the promoters, Vodafone Group Plc and the Aditya Birla group. The latest capital raise comes ahead of the auction of 5G spectrum airwaves.

Vodafone Idea will issue 42.7 million shares or warrants to a promoter group entity at an issue price of Rs 10.20 per share, aggregating to Rs 436.21 crore, the company said in a notification.

In March, Vi approved Rs 4,500 crore fund-raise with the two promoters pitching in. While Vodafone Group invested around Rs 3,375 crore, the Aditya Birla group put in Rs 1,125 crore. However, the company has so far not been able to raise funds from any external investor.

The promoters own 74.99 per cent stake in Vodafone Idea. This will get reduced to 50 per cent after the issuance of 33 per cent stake to the government.

In January, the telco decided to issue shares to the government as it opted to convert interest on deferred liabilities into equity. This would include conversion of interest with net present value of Rs 16,000 crore into equity to the government. The company’s proposal has been confirmed by the Department of Telecommunications.

Stock market regulator Securities and Exchange Board of India has also exempted the government from making an open offer to Vi’s shareholders after the share issuance. A media report last week said that the debt conversion would take place two-three weeks before the 5G auction.