Vodafone Idea Approves ₹2,458 Crore Share Issue to Nokia and Ericsson for Network Expansion

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Vodafone Idea Approves ₹2,458 Crore Share Issue to Nokia and Ericsson for Network Expansion

Team FS

13/Jun/2024

Key Points:

Vodafone Idea to issue up to 166.07 crore shares worth ₹2,458 crore to Nokia and Ericsson.
The share issue aims to bolster Vodafone Idea's capex for 4G and 5G network development.
Nokia and Ericsson to hold 1.5% and 0.9% equity respectively in Vodafone Idea post-issue.

Vodafone Idea Ltd. has announced a strategic move to enhance its network infrastructure by approving the issuance of up to ₹2,458 crore worth of shares to Nokia Solutions and Networks India Pvt. Ltd. and Ericsson India Pvt. Ltd. Both Nokia and Ericsson are key vendors and non-promoter entities for Vodafone Idea, pivotal in the telecom's network expansion plans.

Details of the Share Issue

According to the exchange filing, Vodafone Idea will issue a total of 166.07 crore shares in one or more tranches. Nokia Solutions and Networks will receive 102 crore equity shares at ₹14.8 per share, totaling ₹1,520 crore. Similarly, Ericsson India will be allotted up to 63.37 crore equity shares at the same price per share, amounting to ₹938 crore. The issue price of ₹14.8 represents an 8% discount to Vodafone Idea's closing price on the day of announcement.

Strategic Impetus and Benefits

The primary objective behind this preferential issue is to strengthen Vodafone Idea's financial position by clearing a portion of its outstanding dues and accelerating its capital expenditure towards building a robust 4G and 5G network infrastructure. The telecom giant aims to play a significant role in India's digital transformation by improving network quality and coverage.

Stakeholder Impact and Ownership Structure

Post the issuance, Nokia and Ericsson will hold 1.5% and 0.9% equity stakes respectively in Vodafone Idea. This move reinforces their status as long-term partners of the company, committed to supporting its growth trajectory. Meanwhile, Vodafone Idea's promoter stake will stand at 37.3%, with the government's shareholding at 23.2%.

Financial Strategy and Market Response

Vodafone Idea has raised approximately ₹24,000 crore through various equity routes, including a recent Follow-on Public Offer (FPO) and other financial instruments. The company is actively engaged in discussions with lenders to secure additional debt funding amounting to ₹25,000 crore, highlighting its comprehensive approach to financial restructuring and expansion.

Outlook and Future Plans

The approval of this substantial share issue underscores Vodafone Idea's strategic vision to reinforce its market position amidst challenging industry dynamics. As Akshaya Moondra, CEO of Vodafone Idea, emphasized, partnerships with Nokia and Ericsson are pivotal for the company's long-term growth strategy. The telecom sector awaits further developments as Vodafone Idea continues its journey towards enhancing network capabilities and delivering superior digital services across India.

Conclusion

In conclusion, Vodafone Idea's decision to issue shares to Nokia and Ericsson represents a pivotal moment in its efforts to bolster network infrastructure and navigate through competitive market conditions. The move not only addresses immediate financial requirements but also sets the stage for sustained growth and innovation in telecom services, ultimately benefiting consumers and stakeholders alike in the evolving digital landscape of India.

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Vodafone Idea Approves ₹2,458 Crore Share Issue to Nokia and Ericsson for Network Expansion

Details of the Share Issue

Strategic Impetus and Benefits

Stakeholder Impact and Ownership Structure

Financial Strategy and Market Response

Outlook and Future Plans

Conclusion

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