The telecom department has floated a cabinet note on proposed foreign fund infusion plans by India’s largest telecom operator Vodafone IdeaLtd, which is planning up to Rs 25,000 crore rights issue, according to a source. A telecom department official privy to the development said that the proposal is likely to be taken up by the Cabinet soon.
The official noted that a cabinet note has already been circulated on the FDI proposal linked to the proposed rights issue of the company.
An email sent to Vodafone Idea remained unanswered.
Last month, the board of directors of Vodafone Idea Ltd had approved Rs 25,000 crore fund-raising plan by way of rights issue to existing eligible equity shareholders.
The promoter shareholders — Vodafone Group and Aditya Birla Group — have informed the board that they intend to contribute up to Rs 11,000 crore and up to Rs 7,250 crore, respectively as part of such rights issue.
The promoter shareholders have also said that in case the rights issue is under-subscribed, each of the promoter shareholders reserves the right to take up part or whole of the unsubscribed portion, subject to stipulated law.
The Vodafone Idea board has authorised the Capital Raising Committee to decide the nuances of the rights issue, including the instrument, issue price, rights entitlement ratio, record date, timing of the issue and other matters.
The proposed rights issue will arm Vodafone Idea Ltd with firepower to take on market competition intensified by Reliance Jio. Also, Vodafone Idea has recently approached the DoT seeking two-year moratorium on its annual spectrum payment of about Rs 10,000 crore, citing high debt levels and stress on the balance sheet.
British telecom major Vodafone holds 45.1 stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group controls 26 per cent and Idea shareholders own 28.9 per cent.
The mega merger was announced a few months after the entry of the deep-pocketed Reliance Jio, whose aggressive pricing and freebies impacted the financials of the entire industry, which has even seen bankruptcies and asset sell-offs. – Bloomberg Quint