Voda Idea likely to bring in new equity partners; board meeting on Tuesday

Vodafone Idea is likely to raise equity from new investors, a move that will dilute the stakes of existing shareholders, including Vodafone Group Plc, Aditya Birla Group, and the Government of India.

The company’s board of directors is meeting this Tuesday to decide on the amount of the fundraise.

This fundraise is over and above the Rs 2,000 crore already committed by the promoters in August last year. The fresh fundraise exercise will offer the existing shareholders a chance to maintain their stake in the company, according to an insider. Aditya Birla Group holds an 18.1 per cent stake in the company, while the Indian government owns 33 per cent. The UK’s Vodafone Group has a 32.3 per cent stake. In the past, the British firm has declined to inject any more funds into the Indian company.

An email sent to Aditya Birla Group did not elicit any response until the time of going to press. Shares of Vodafone Idea closed 4 per cent down at Rs 17 apiece on Monday.

Banking sources said the new funds will be used by the firm to repay banks and suppliers. Of the total Rs 5,400 crore debt payable from December this year, Rs 1,600 crore is tied up in optionally convertible debentures, where repayment hinges on conversion. 

“Capital expenditure for the rollout of 4G and 5G-based telecom networks is of significant importance. The much-anticipated capital raise is crucial to ensure immediate liquidity and facilitate network expansion,” said an analyst, adding that the company still has a debt of Rs 2.1 trillion on its books, with an annual instalment of Rs 43,000 crore due from FY26 onwards.

The company's current low Ebitda (earnings before interest, tax, depreciation and amortisation) will make it difficult to service debt without an external fund infusion, according to a recent note from an analyst at Motilal Oswal Financial Securities

In the December quarter, the company reported a gain of Rs 760 crore from a Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruling related to the excess amount paid during the merger with Vodafone’s India operations. This will be adjusted towards the government dues.