Voda Idea gains 10% on board nod to raise Rs 25,000 crore via shares, debt

Meanwhile, the telecom major has also unveiled new brand identity 'Vi'

Shares of Vodafone Idea (VIL) rose as much as 10 per cent to Rs 13.21 on the BSE on Monday after the company’s board approved fund raising by up to Rs 25,000 crore by way of share sale and debt.

After market hours on Friday, VIL had announced a fund raising of Rs 15,000 crore of equity and debt instruments each with aggregate quantum capped at Rs 25,000 crore. VIL is owned by Vodafone plc and the Aditya Birla group.

Meanwhile, the telecom major today announced its rebranding with a new brand called “Vi” (read as “We”). “The brand integration not only marks the completion of the largest telecom merger in the world, but also sets us on our future journey to offer world class digital experiences to 1 Billion Indians on our strong 4G network. VIL is now leaner and agile, and the deployment of many principles of 5G architecture has helped us transform into a future-fit, digital network for the changing customer needs,” said Ravinder Takkar, MD & CEO, Vodafone Idea. CLICK HERE FOR FULL RELEASE

The relaunch, coming two years after the August 2018 merger of Vodafone and Idea Cellular, is to have a combined brand identity and advertising around it. Till now, the organisation has been advertising the two brands separately.

The company was hard hit by the Supreme Court ruling in October last year, when it was asked to pay Rs 58,254 crore of the adjusted gross revenue (AGR) dues to the government. However, the court has now given 10 years to all the telecom companies to pay their past dues. Vodafone Idea has paid Rs 7,854 crore as AGR to the Department of Telecommunications.

“The equity infusion could help VIL reduce leverage from 12.3X to 11.4X. Further, debt capital raise would enable VIL to refinance its non-spectrum debt maturing till FY23E,” analysts at Credit Suisse said in company update.

Analysts believes that Rs 15,000 crore equity infusion would help cash flow needs of VIL only till FY23E even after assuming operational improvement. Further, given under-investment since merger, analysts believe that VIL will need to 'catch up' on 4G capex as a pre-requisite for operational improvement. 5G capex could further stretch the cash flow situation for VIL and any delay would result in further market share loss. The brokerage firm thinks VIL would need multiple rounds of equity infusion over the medium term for longer-term viability and investment in 5G.

The stock hit its 15-month high of Rs 13.45 in Friday's intra-day trade. It rallied 75 per cent from its intra-day low of Rs 7.69, hit on September 1, 2020.

At 12:22 pm, VIL shares had erased half of its intra-day gain and were up 5 per cent at Rs 12.60 on the BSE. In comparison, the S&P BSE Sensex was down 0.13 per cent at 38,309 points. A combined 1,097 million equity shares have changed hands on the counter on the NSE and BSE, so far.