Vodafone Idea to open Rs 18,000 crore FPO on April 18, check details

Shares of Vodafone Idea are in news today after the telco said its plans to raise up to Rs 18,000 crore via follow-on public offer (FPO) of equity shares. The Capital Raising Committee of Vodafone Idea also cleared the floor price of the offer to be Rs 10/- per equity share, offering a potential discount of around 17% compared to its closing price on Wednesday. It also approved the cap price of the offer to be Rs 11/- per equity share. Shares will  be offered in a minimum bid lot of 1,298 equity shares and in the multiples of 1,298 equity shares thereafter.

Meanwhile, shares of Vodafone Idea were trading 2.86% lower at Rs 12.56 in early deals today against the previous close of Rs 12.93 on BSE. Market cap of the firm fell to Rs 61,044.49 crore. 

Total 121.1 lakh shares changed hands amounting to a turnover of Rs 15.35 crore on BSE. 

The FPO will open on April 18, 2024 and close on  April 22, 2024, the  telco said in a communication to bourses. 

Shivani Nyati, Head of Wealth, Swastika Investmart said, "This fresh issue of shares will be used to expand VI's network infrastructure, including setting up new 4G and 5G towers to compete more effectively with market leaders Jio and Airtel. Additionally, the funds will be used for debt reduction".

"While the fundraising could strengthen VI's infrastructure, the company faces challenges on the financial front. Unlike its competitors, VI has experienced a consistent user base decline. Furthermore, a potential financial crunch looms in 2026 when significant spectrum and AGR (Adjusted Gross Revenue) dues of up to $4 billion become payable. Despite the discount of 15-17%, VI's path to a near-term revival seems uncertain. Therefore, investors should carefully consider these factors before participating in the FPO," added Nyati. 

The board of the firm passed a resolution approving, adopting and filing of the red herring prospectus (RHP) dated April 11, 2024 with the Registrar of Companies, Gujarat in connection with the FPO. 

A meeting of the Capital Raising Committee was held today to consider and approve, amongst other things, the price band and discount, if any, as permitted under the provisions of the SEBI ICDR Regulations, said the firm.