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Vodafone Idea parent companies to invest $400 million: Report

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Both promoters -- UK’s Vodafone Group Plc and Aditya Birla Group – will invest $200 million each in fresh equity

Vodafone Idea parent companies to invest $400 million: Report
The promoters of Vodafone Idea, UK’s Vodafone Group Plc and Aditya Birla Group, will invest $200 million each in fresh equity in the beleaguered telecom operator, according to latest reports.
The fresh infusion will help the parent companies retain their stakes at the current level after the telecom operator raises funds from external investors, Mint reported quoting people aware of the development.
Vodafone Idea plans to raise about Rs 25,000 crore through a mix of equity and hybrid debt from outside investors. The company has been in talks with several strategic and financial investors for over a year. Investors, however, were wary of the impact of Vodafone Idea’s annual regulatory dues of Rs 25,000 crore over the next decade.
On September 16, the government announced a relief package for the stressed telecom sector, which included a four-year moratorium on airwaves fees, 100 per cent foreign direct investment through the automatic route, and redefined adjusted gross revenue (AGR).
AGR is the licensing fee and usage charges paid to the government by telecom operators.
As of June 30, Vodafone Idea had a gross debt of Rs 1.9 trillion, of which spectrum payment dues were Rs 1.06 trillion and AGR dues Rs 621.8 billion.
The government’s relief package has helped improve Vodafone Idea’s viability with its current market value standing at Rs 31,000 crore.
The telecom company now hopes to reach a fundraising deal with potential investors.
“Kumar Mangalam Birla is expected to invest the amount via unlisted promoter entities, and none of the group’s listed companies will invest,” one of the sources told Mint.
Vodafone Group Plc holds 44.39 per cent in the Indian unit, while Aditya Birla Group owns 27.66 per cent through Grasim Industries, Hindalco Industries, Birla TMT holdings and other group firms. The Vodafone Group holds 28.12 per cent in the tower firm, Indus Towers.
Earlier, both promoters had ruled out any fresh infusion of cash owing to adverse regulatory and business environments.
“The size of the fundraising could be smaller than what was decided earlier, but potential investors are keen that the promoters, too, put fresh equity in the company to demonstrate their commitment to the business," another source told Mint, adding that the telecom operator may raise less than $2 billion investment from both promoters and external investors.
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