Vi Approves ₹2,458 Crore share issue to settle Nokia and Ericsson dues

12 Jul 2024 , 01:59 PM

Vodafone Idea (Vi) shareholders have approved issuing preferential shares worth ₹2,458 Crore to long-term vendors Nokia and Ericsson. This decision, made to partially settle outstanding dues, was disclosed in a regulatory filing on Thursday.

The Vi board proposed offering 1,027 million equity shares with a face value of ₹10 each to Nokia and 633.7 million shares to Ericsson.

The shareholder vote on this decision took place at an extraordinary general meeting on Wednesday. After this preferential issuance, Nokia will hold a 1.5% stake in Vi, and Ericsson will have a 0.9% stake. The combined stake of Aditya Birla Group and Vodafone Plc, the promoters, will be 37.3%.

The Centre will hold a 23.2% stake, while the remaining 37.1% will be public shareholding.

This move aims to address vendor concerns regarding pending payments and secure support from Nokia and Ericsson to help Vi expand its 4G coverage more rapidly.

Vi’s expansion goals include enhancing 4G coverage, adding more towers in the sub-gigahertz segment, and rolling out 5G. The preferential issue is positioned to strengthen Vi’s capital expenditure rollout.

With this equity issuance, Vi has raised ₹24,000 Crore, which includes:

• Conversion of 1,440 optionally convertible debentures (OCDs) by ATC India in March 2024.
• A follow-on public offer (FPO) in April 2024.
• A preferential issue to promoters in May 2024.

Vi is also in discussions with lenders to raise debt funding of ₹25,000 Crore, as part of its fundraising strategy.

In the fourth quarter (Q4) of FY24, Vi reported a net loss of ₹7,674.6 Crore, up 19.5% from ₹6,418.9 Crore in Q4 FY23, due to higher expenses and stalling revenue. Finance costs for Q4 FY24 increased to ₹6,280.3 Crore, a 25.5% rise from ₹5,006.4 Crore in the same quarter the previous year. For FY24, the net loss expanded to ₹31,238 Crore, up 6.6% from ₹29,301 Crore in FY23.

As of the end of March, Vi had a total subscriber base of 219 million and prioritised 4G coverage expansion over 5G, unlike competitors Reliance Jio and Bharti Airtel, who have already rolled out 5G.