Vodafone Idea will raise $2,075 crore from the Aditya Birla Group, its promoter

The board of Vodafone Idea has approved financing Rs 2,075 crore from promoter Aditya Birla group and expanding its authorized share capital to Rs 1 lakh crore, which is a relief for the heavily indebted firm.

According to a regulatory filing, the firm said that it would ask for the approval of its proposals from shareholders at an extraordinary general meeting on May 8.

“The Vodafone Idea board has approved the issuance of up to 1,395,427,034 equity shares on a preferential basis to Oriana Investments Pte. Ltd (an Aditya Birla Group entity that is a part of the promoter group), at an issue price of Rs 14.87 per equity share (including a premium of Rs 4.87 per equity share), totaling Rs 2,075 crore,” the filing stated.

The board has also approved an increase in the company’s authorized share capital to Rs 1 lakh crore from the current Rs 75,000 crore, which is split into Rs 70,000 crore for equity shares and Rs 5,000 crore for preference shares.

The company’s expanded authorized share capital would be split into two categories: equity share capital worth Rs 95,000 crore and preference share capital worth Rs 5,000 crore.

The business aims to raise Rs 20,000 crore in capital to finance its operations and reduce its debt load, and this includes the clearances.

The telecom giant will be able to bring out 5G services and expand its 4G network thanks to the funding. According to analysts, by providing a better customer experience, these actions may help the corporation reclaim some of its competitive advantage.

The Indian government owns little more than 33% of Vodafone Idea. The company plans to raise Rs 45,000 crore via a combination of debt and equity to match rivals Jio and Bharti Airtel’s offers and perhaps reduce attrition among its subscribers.

With the influx of funds, Vodafone Idea will have the means to improve its competitive position in the telecom industry, where it lags far behind bigger competitors Reliance Jio and Bharti Airtel.