Vodafone Idea’s follow-on share offer subscribed 5.4 times

Vodafone Idea’s Rs18,000-crore follow-on public offer (FPO) of equity shares managed to attract subscription for as many as 6.349 billion shares, against the 1.260 billion shares on offer, as the FPO closed for subscription on Monday.

While the 5.4 times subscription, mostly from institutional investors, with little interest from retail investors, is no great achievement, it gives hope to the debt-laden telecom company amidst uncertainty over the future of the company.

The subscription mainly came from qualified institutional bidder (QIBs), who sought to buy 13.89 times the 3.60 billion shares reserved for them, while non-institutional investors bid for 3.40 times the 2.70 billion shares earmarked for them.

The retail investor portion was subscribed 0.68 times the offer for them by the last day of the FPO.

Institutional investors are pouring money into the debt-laden company on the strength of Government of India’s majority stake in the company – an over 80 per cent stake on a fully diluted basis – which would potentially absorb any downside for the company.

Money from the share issue should help improve the functioning of the company, including network coverage and competitiveness, thereby improving its position in a market led by top telco Reliance Jio and its lesser peer Bharti Airtel.

Vodafone Idea also needs funds for the roll-out of 5G and strengthening 4G services, as also for payment of vendor dues.

Moreover, Vodafone Idea will have to find enough subscribers to level off the continued loss of subscribers over the past few years. According to the Trai data, Vodafone Idea currently has a subscriber base of 215 million.

Reports say the company is also looking to raise as much as Rs25,000 crore in bank loans.