Vodafone Idea Passes Resolution To File RHP For Rs 18,000-Crore FPO

Vodafone Idea Limited, India's second-largest telecom operator by subscriber base, held a board meeting on March 24, 2023, where it passed a resolution to file a Red Herring Prospectus (RHP) with the Securities and Exchange Board of India (SEBI) for an proposed follow-on public offer (FPO) worth approximately Rs 18,000 crores (around $2.3 billion). This decision comes as part of the company's efforts to reduce its debt and strengthen its balance sheet.

The telecom major is planning to sell fresh shares worth up to Rs 12,500 crores and offer shares worth up to Rs 5,500 crores from existing shareholders through the FPO. The proceeds from the sale of fresh shares will be utilized for the prepayment or reduction of debt and for general corporate purposes. The shares to be sold by existing shareholders will be through a secondary sale of shares.

The company's board also approved the appointment of SBI Capital Markets Limited and Axis Capital Limited as the book running lead managers for the proposed issue. The RHP is expected to be filed with SEBI within the next 30 days, and the issue is likely to open for subscription in April 2023.

Vodafone Idea has been grappling with a significant debt burden due to the merger of Vodafone India and Idea Cellular in 2018 and the subsequent spectrum auction in 2019. The company's net debt stood at around Rs 1.7 lakh crores as of December 2022. The proceeds from the FPO are expected to help the company reduce its debt and improve its financial health.

It is important to note that the success of the FPO will depend on various factors such as market conditions, investor sentiment, and the pricing of the shares. The company's financial performance and its ability to execute its growth strategy will also be closely watched by investors.

In conclusion, Vodafone Idea's decision to file an RHP for an Rs 18,000-crore FPO is a significant step towards reducing its debt and strengthening its balance sheet. The proceeds from the sale of fresh shares will be used for debt reduction, while the secondary sale of shares by existing shareholders will provide an opportunity for existing and new investors to participate in the growth story of the company. The success of the FPO will depend on various factors and will be closely watched by the market.