Telecom Department Floats Cabinet Note On Vodafone Idea’s FDI Proposal

The telecom department has floated a cabinet note on proposed foreign fund infusion plans by India’s largest telecom operator Vodafone Idea Ltd, which is planning up to Rs 25,000 crore rights issue, according to a source.

A telecom department official privy to the development said the proposal is likely to be taken up by the cabinet soon. The official noted that a cabinet note has been circulated on the Foreign Direct Investment 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 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 in case the rights issue is under-subscribed, each of the promoter shareholders reserve the right to take up part or whole of the unsubscribed portion, subject to stipulated law.

Vodafone Idea’s board has authorized the capital raising committee to decide the nuances of the rights issue, including the instrument, issue price, rights entitlement ratio, the record date, the timing of the issue and other matters.

The proposed rights issue will arm Vodafone Idea with firepower to take on market competition intensified by Reliance Jio. Also, Vodafone Idea has recently approached the telecom department seeking a two-year moratorium on its annual spectrum payment of about Rs 10,000 crore, citing high debt levels and stress on the balance sheet.―Bloomberg Quint