NEW DELHI: Vodafone Idea (VIL), India’s third-largest telecom service provider, approved allotment of 166 crore equity shares worth Rs 2,458 crore to two of its key vendors, Nokia Solutions and Networks India Private Limited, and Ericsson India Private Limited.
The move will help the debt-laden telco to roll out a 5G network in and improve its 4G services as both Nokia and Ericsson are key suppliers of network equipment. This allotment will also enable VIL to clear part of its outstanding dues owed to its vendors.
This is perhaps the first time any telco in the country is issuing its shares to procure network equipment. Post this preferential issuance, the shareholding of Nokia and Ericsson in the company will be 1.5% and 0.9%, respectively. The telco, in a statement, said Nokia and Ericsson will participate for up to Rs 1,520 crore and Rs 938 crore, respectively, subject to approval by VIL shareholders at the EGM to be held on July 10, 2024.
“As VIL embarks on its growth journey, support from key stakeholders is critical and the agreement with Nokia and Ericsson reaffirms these vendors as long-term partners of the company, and sets the stage for the next phase of our growth,” said Akshaya Moondra, CEO, VIL.
VIL said with this equity issuance, it has raised Rs 24,000 crore. This includes the conversion of 1,440 OCDs in March by ATC India (out of 1,600 OCDs issued), FPO issue in April 24, and preferential issue to promoters in May 2024. The telco is in talks with its lenders to raise debt funding of Rs 25,000 crore.
“This fundraise (equity and debt) will empower the company to work towards executing its strategy including expansion of its 4G coverage and launch of 5G services,” said the company. It approved the preferential allotment of 166 crore equity shares of face value of Rs 10 each at an issue price of Rs 14.80 per share. This preferential allotment price is higher by 35% to the FPO price and comes with a lock-in of 6 months.
Currently, the Promoter (ABG and Vodafone) shareholding will stand at 37.3%, and the shareholding of the Government of India will stand at 23.2%, while the balance 37.1% will be public shareholding.