Vodafone Idea's Rs25,000-cr issue priced at a deep discount
20 Mar 2019
Vodafone Idea Ltd, India’s largest telecom company by subscriber numbers, today approved a rights issue of shares worth Rs25,000 crore, at a discount of more than 60 per cent, which sent its shares tumbling.
Shareholders will be able to buy 87 shares for every 38 shares held for an issue price of Rs12.50 apiece, Vodafone Idea stated in a release.
The Vodafone Idea rights issue is the second major fundraising by an Indian telco this year after Bharti Airtel Ltd announced a similar plan to reduce debt and finance operations.
The rights issue once fully subscribed, would triple the outstanding shares of the combined entity.
Under the rights offer, existing Vodafone shareholders will be able to buy 87 shares for every 38 shares held at an issue price of Rs12.50 each, the firm said in a statement. That will be a discount of 61 per cent to the stock’s closing price on Tuesday.
Bharti Airtel Ltd announced a similar plan to raise $4.6 billion for reducing debt and funding operations after a steep price competition with new entrant Reliance Jio Infocomm.
The issue will increase the number of Vodafone Idea shares by 229 per cent, diluting it to 28.74 billion outstanding shares.
Promoters Vodafone Group PLC of Britain and India’s Aditya Birla Group will also take part in the issue by subscribing to shares worth up to Rs11,000 crore and Rs7,250 crore, respectively, the company said.