Vodafone Idea Ltd. has been authorized by its board to issue up to 166.07 crore shares, valued at up to ₹2,458 crore, to Nokia Solutions and Networks India Pvt. Ltd. and Ericsson India Pvt. Ltd., as confirmed in a filing with the stock exchange. Both companies are external vendors crucial to Vodafone Idea’s operations.
The issuance involves 102 crore equity shares at ₹14.8 per share, amounting to ₹1,520 crore, to Nokia Solutions and Networks, and up to 63.37 crore equity shares at the same price to Ericsson India, totaling ₹938 crore. While the issue price of ₹14.8 represents an 8% discount to Vodafone Idea’s Thursday closing price, it’s 35% higher than the FPO issue price and comes with a six-month lock-in period for both entities, prohibiting the sale of these shares immediately post-allotment.
What does this move by Vodafone mean?
This move is aimed at helping Vodafone Idea settle some of its outstanding dues and fortify its investment in developing a robust 4G & 5G network to support India’s digital transformation, as stated by the telecom provider. Post this transaction, Nokia and Ericsson will hold 1.5% and 0.9% equity in Vodafone Idea, respectively, while promoter stake will remain at 37.3%, and government shareholding at 23.2%.
Idea has raised nearly ₹24,000 crore through equity, including ₹18,000 crore via a Follow-on Public Offer, ₹2,075 crore from a promoter group entity, and conversion of Optionally Convertible Debentures in March 2024. The company is also in discussions with lenders to secure debt funding of ₹25,000 crore. As of March 2024, Vodafone Idea had a subscriber base of 212.6 million.
The company’s CEO, Akshaya Moondra, highlighted the importance of support from key stakeholders and reiterated Nokia and Ericsson as long-term partners. However, the company’s stock fell 2.1% to ₹16.08 at Wednesday’s close of trading, registering a 5.4% decline in 2024.