Vodafone Idea earmarks ₹5,720 Crore from FPO proceeds for 5G

16 Apr 2024 , 11:39 AM

Cash-strapped telco Vodafone Idea (Vi) will begin rolling out 5G services in six to nine months after completing an equity investment round of over ₹20,000 Crore this quarter, the company’s CEO said on Monday.

According to a person familiar with the subject, the business intends to spend more than 70% of its over ₹45,000 Crore loan and equity cash raising on capex for the 5G deployment and 4G network expansion.

Addressing reporters on Monday, chief executive Akshaya Moondra stated that the ₹18,000 Crore follow-on share offer will reduce the government interest to 24%, which might grow to a comfortable 32-33% if the Centre agrees to convert part of the principle dues into equity.

Moondra stated during a news briefing that the government had included provisions in the reform package announced in September 2021. These provisions entail the conversion of installments resulting from the deferment of four years, commencing post-September 2025, into equity by the government. Our intention is to cover these installments using our cashflows, although government assistance is accessible as part of the reform package.

The government is the largest stakeholder in Vi, owning around 32% of the company. After equity dilution in the present round, its stake will be reduced to 24%, which is a reasonable range for the government to prolong a reform package in FY26, when the moratorium on spectrum payments expires, Moondra added.

According to Kotak Institutional Equities, once the moratorium expires, Vi’s obligations for deferred payment payments and adjusted gross revenue-related dues will be ₹29,070 Crore for FY26 and ₹43,010 Crore each for the next five years.

Vi has allocated ₹5,720 Crore to the 5G rollout from the ₹18,000 Crore it intends to receive from the follow-on public offer. The operator plans to spend ₹12,750 Crore (71% of total funds) on network development expenditure during the next two fiscals.

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