Vodafone Idea’s ₹25,000-crore rights issue, the largest in the country, will open for existing subscribers on Wednesday, even as the telecom service provider is readying to monetise its tower and fibre assets.
As told by Businessline, Vodafone Idea CEO said the rights issue, wherein the promoters (Vodafone Group and Aditya Birla Group) will infuse up to ₹18,250 crore, will close on April 24. With the two companies coming together, they will share a strong set of assets and in turn, enhancing coverage and customer experience.
He said in order to do that, they needed the funding, for which the rights issue had been an important step.
The issue comprises up to 2,000 crore shares at ₹12.50 a share, totalling ₹25,000 crore for shareholders of record date April 2, 2019.
The Vodafone Group will infuse up to ₹11,000 crore and Aditya Birla Group will put in up to ₹7,250 crore, which is 73 per cent of the rights issue,said CFO at Vodafone Idea.
Integration
Kotak Mahindra Capital Company, DSP Merrill Lynch Ltd, Morgan Stanley India Company, HDFC Bank and SBI Capital Markets are the lead managers to the rights issue.
The company is planning to build a war chest to accelerate integration of its operations (Idea and Vodafone), prioritise investments in profitable areas and focus on increasing average revenue per user (a financial metric for a telecom company) and focus on increasing business.
Vodafone India and Idea Cellular, which had announced their merger last year, have already integrated 9 of the total 22 radio networks.
Monetisation
Apart from the rights issue, the company is looking to monetise its fibre assets and its stake in Indus Towers (a joint venture between Bharti Airtel, Vodafone and Idea) to create a long-term war-chest.
They want to monetise their fibre portfolio. Hence, they are shifting their fibre assets to a wholly-owned subsidiary and are looking for prospective investors. The monetisation can be driven by the fact that they continue to be one of the users with a sale and lease-back arrangement.
The combined portfolio of 1.56 lakh route km of fibre is being moved to Vodafone Tower. The company wants to rope in private equity investors for its fibre assets.
11% stake in Indus Towers
On the tower front, the company holds an 11.15 per cent stake in Indus Towers, which is being merged with Bharti Infratel. When the merger gets completed, they will have the ability to cash it out.
