India’s Vodafone Idea Raises $5.4 Billion through Debt and Equity Financing

Vodafone Idea, India’s third-largest service provider, plans to raise a total of INR 450 billion (USD 5.4 billion) through a combination of equity and debt to expand 4G coverage, invest in 5G launch, improve customer experience, and increase capacity.
According to the documents submitted by the exchange, the company plans to raise 200 billion rupees (2.4 billion US dollars) through stocks or stock related instruments, with the remaining 250 billion rupees (3 billion US dollars) raised through debt.
The company stated that it will hold a shareholder meeting on April 2, 2024. After obtaining shareholder approval, the company hopes to complete the financing of the equity fund in the next quarter. Vodafone Idea also announced that the initiators, Vodafone Group and Aditya Birla Group, will participate in equity financing. However, it is currently unclear how much equity will come from the initiators.

Vodafone Idea stated, “The proposed fundraising is taking place after significant improvements in operational indicators. Over the past 10 quarters, the company has achieved continuous growth in its 4G user base and ARPUs. In addition, the company remains focused on providing competitive data and voice experiences in all locations where it exists. In recent quarters, the company has also firmly established a differentiated digital experience and added some digital products.” Even with limited investment, the company’s performance has been continuously improving. With the proposed fundraising and active business development, the company is confident in effectively competing in the market
Vodafone Idea is the only private service provider that has not yet launched 5G services. Reliance Jio and Bharti Airtel, the two largest service providers in India, launched 5G as early as October 2022. They have almost completed coverage throughout India and claim to have over 100 million users.
Akshay Moondra, CEO of Vodafone Idea, stated that the company plans to launch 5G services within the next six to seven months. The company recently made headlines for using Mavenir for an open RAN pilot before its large-scale launch.
But due to the inability to upgrade the network or launch 5G services, the company continues to lose market share. According to data released by the Telecommunications Regulatory Authority of India (TRAI), Vodafone Idea’s market share has decreased from 2.61% in December 2022 to 2.17% in December 2023. Its user base decreased from 241 million in December 2022 to 223 million in December 2023.

The delay in launching 5G is mainly due to Vodafone Idea’s huge debt. As of December 31, 2023, Vodafone Idea’s total debt amounted to INR 2.14 trillion (USD 25.93 billion), including INR 2.1 trillion (USD 25 billion) owed to the government for delayed spectrum payment obligations and adjusted total revenue liabilities. In addition, the company also owes 60.5 billion rupees (729.9 million US dollars) to banks and financial institutions, and 16.6 billion rupees (20.2 million US dollars) to convertible bonds.
As fierce competition continues to erode its user base, this financing is crucial for the survival and comeback of this service provider.