Indian telco Vodafone Idea plans to raise over $5 billion to roll out 5G, expand 4G

By Rama Venkat

BENGALURU (Reuters) -India's Vodafone Idea said on Tuesday it plans to raise around 450 billion rupees ($5.43 billion) through equity and debt, which will help the debt-saddled telecom company roll out its 5G network service and expand 4G coverage.

The 200-billion rupee equity fundraise, which was approved by the board, will see participation from promoters or large shareholders with influence on company policies, it said.

India's third largest telecom carrier by number of subscribers said it remained engaged with its lenders on finalising the debt funding.

The company had raised 250 billion rupees in 2019 through a rights issue, while a promoter group entity, that it did not name, promised financial support of 20 billion rupees in August last year.

"The portion of equity funds promised by promoters being only 10% does not inspire confidence as to how the company will manage to raise the rest," said Vivekanand Subbaraman, an analyst at brokerage Ambit Capital.

However, the plan is broadly in line analysts' expectation of a 400-500 billion rupees capital infusion, which could help Vodafone Idea catch up with larger rivals in terms of network capacity.

Vodafone Idea could roll out its 5G services within six to seven months after it raises funds, CEO Akshay Moondra said in a post-earnings call last month.

Rivals Bharti Airtel and Reliance Jio have already launched 5G services in most parts of the country.

Their average revenue per user, a key performance metric for telecom firms, stood at 208 rupees and 181.7 rupees, respectively, in the December quarter, with Vodafone Idea's coming in at 145 rupees.

As of 2023-end, Vodafone Idea's total debt pile stood at 2.15 trillion rupees, including deferred spectrum payment obligations it owes to the government.

Its cash and cash equivalents as on the same period were at 3.19 billion rupees.

($1 = 82.8490 Indian rupees)

(Reporting by Rama Venkat and Aleef Jahan in Bengaluru; Editing by Sohini Goswami)