Vodafone Idea on Friday announced that the company plans to raise up to Rs 25,000 crore in fresh capital through a combination of equity and debt instruments to keep the company afloat.
The announcement comes days after the Supreme Court delivered its verdict on the Adjusted Gross Revenue (AGR) case and directed the telcos to pay 10 per cent of total AGR-related dues this year, and rest of the payments in 10 instalments, starting next fiscal year.
The fund raising will give a life-line to the loss-making company, which has suffered massive losses, as it has been losing subscribers and faces outstanding AGR dues of about Rs 50,000 crore.
“Issue of equity shares or securities convertible into equity shares, Global Depository Receipts, American Depository Receipts, foreign currency convertible bonds, convertible debentures, warrants, composite issue of non-convertible debentures and warrants entitling the warrant holder(s) to apply for equity shares or a combination thereof up to an aggregate amount of Rs. 15,000 crore by way a public issue, preferential allotment, private placement, qualified institutions placement or through any other permissible mode in one or more tranches,” the company said in a regulatory filing on Friday.
The fund-raising plans are subject to shareholders’ nod and other statutory approvals.
The filing further mentioned, “issuance of unsecured and / or secured, non-convertible debentures up to an aggregate amount of Rs. 15,000 crore, by way of public offering or private placement basis or otherwise, in one or more tranches.”
“However, the total raising of funds under (a) and (b) above shall not exceed Rs. 25,000 crore,” it added.
The proposals will be taken up at the company’s annual general meeting scheduled on September 30, 2020.
It is worth mentioning that Vodafone Idea on Thursday clarified that it had received no $ 4 billion investment proposal from Amazon.com or Verizon. However, it constantly evaluates various opportunities as part of corporate strategy, there is no such proposal currently before the Board at yet.
Fund infusion is critical for VIL, the third largest operator in the fiercely-competitive Indian telecom market, where Jio’s entry in 2016 with free calls and cheap data pushed some rivals to exit, acquire, or merge to stay afloat.
Notably, Vodafone Idea’s overall AGR dues stood at over Rs 58,000 crore, of which the company has paid Rs 7,854 crore to the Department of Telecom so far.
The statutory dues arose after the Supreme Court, in October last year, upheld the government’s position on including revenue from non-core businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.
VIL has been under severe financial pressure, and analysts time and again have cautioned that the company’s longer-term viability remains under cloud.
In December, Vodafone Idea Chairman Kumar Mangalam Birla had said VIL may have to shut if there is no relief on the statutory dues.
The company had reported a staggering Rs 73,878 crore of net loss in fiscal ended March 2020 – the highest ever by any Indian firm – after it provisioned for Supreme Court mandated statutory dues.
It reported a net loss of Rs 25,460 crore for the June quarter after making additional provisions to pay past statutory dues and had said its ability to continue as going concern hinges on the Supreme Court allowing more time to pay dues.