New Delhi: Private telecom operator Vodafone-Idea, facing financial challenges, had its board approve a fund-raising plan of ₹45,000 crores on Tuesday. This includes a ₹20,000 crore equity-based fund raise from existing investors. A shareholder meeting for the fund raise is scheduled for April 2, with the operator aiming to complete the equity fund raise by the end of the upcoming June quarter.
After the equity fund raise, Vodafone-Idea further plans to secure debt, bringing the total funding to ₹45,000 crores. The company confirmed that existing promoters of Vodafone-Idea will also participate in the equity fund raise.
Vodafone-Idea, which is also the only telecom operator without 5G services for consumers, is set to introduce 5G services this year. Kumar Mangalam Birla, chairman of Aditya Birla Group, one of the main promoters of Vodafone-Idea, mentioned at the 2023 India Mobile Congress keynote that they aim to launch 5G services. The telecom operator reiterated this commitment in Tuesday’s release, stating that the funds raised will be used “towards significant expansion of 4G coverage, 5G network rollout and capacity expansion.”
Vodafone-Idea faces a major challenge with a declining customer base. According to data from Telecom Regulatory Authority of India (Trai), Vodafone-Idea’s subscriber count was 223 million at the end of December 2023, a 7.5% decrease from 241.3 million a year ago. In the final month of the previous year, the telecom operator lost 1.37 million net subscribers. In contrast, Reliance Jio and Bharti Airtel gained 3.99 million and 1.85 million subscribers in December, having 459.8 million and 381.7 million subscribers, respectively.
However, the telecom company said that its fundraising initiative “follows a marked improvement in operating metrics.”
“The company has managed to grow its 4G subscriber base and average revenues per user (Arpus) consecutively for the last 10 quarters. It remains focused on providing competitive data and voice experience at all locations where it is present… and is also steadfast in building a differentiated digital experience adding several digital offerings in the recent quarters. It has consistently shown an improvement in performance even with limited investments. With the proposed fund raise and the positive operational developments, the company is confident of effectively competing in the market,” Vodafone-Idea’s media statement read.
In the last year, Vodafone-Idea’s Average Revenue Per User (Arpu) rose to ₹145, marking a 7.5% increase from ₹135 a year ago. However, the earnings per user for Vodafone-Idea were considerably lower compared to Bharti Airtel’s ₹208 and Reliance Jio’s ₹182 in Arpu reported in December of the same year.
