Approval for Rs.45,000 crore Fundraise by Vodafone Idea Board

Vodafone Idea, once a leading telecom giant, has been finding it hard in recent years due to heavy losses. They have been working on trying to raise funds to reduce their rising debts and high-interest outgoings. In order to revive the company and stay relevant in the telecom market, a huge mega round of funding is required. As per reports, the company is trying to use a mix of equity and debt to raise Rs.45,000 crores to expand its network and launch high-speed 5G services.

Journey so far

Massive investments such as this one will play a major role in surviving and taking on the market with rivals Reliance Jio and Bharti Airtel. The company allegedly had been trying to raise this kind of funding for the past three years without much success. However, even the government stepping in and buying a 33% stake in lieu of future payouts, which actually is the 3rd largest telco acquisition, did not help much in resolving the issue.

Future fundraising

According to the company, the management, which is still headed by the original promoters Aditya Birla head, Mr. Kumar Mangalam and Vodafone UK, has decided to approve the funding of Rs. 20,000 crores with equity and equity-linked instruments while an additional investment of Rs.25,000 crores, which would be managed with combined equity and debt. Also, the promoters will participate in the equity raise as part of the commitment.

Investment usage

An investment this big will help Vodafone Idea position itself well to compete with rivals and give customers a better experience by expanding its 4G coverage and providing a 5G network. As per reports, Vodafone Idea currently has a debt of Rs.2.2 lakh crore and a net loss of 7,990 crore in the previous financial year. The new funding will help arrest the worsening of the financial performance of the company.

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