Vodafone Idea, the country's largest telecom operator, on Wednesday said its board has approved raising of up to Rs 25,000 crore through rights issue.
"The board of directors of Vodafone Idea has approved the offer and issue of fully paid-up paid-up equity shares and other equity linked instruments by way of a rights issue to the eligible shareholders of the company for an amount aggregating up to Rs 25,000 crore billion in accordance with the applicable laws," Vodafone Idea said in a filing to the Bombay Stock Exchange.
The telecom gaint said its board approved issuance of 2,000 crore fully paid up equity shares (face value of Rs 10 each) at a price of Rs 12.5 per share by way of a rights issue to the eligible shareholders as on the record date April 02, 2019.
Following the announcement, shares of Mumbai-based company gained as much as 2 per cent to touch an intra-day trade high of Rs 32.65 apiece, against its previous close of Rs 32 on the BSE.
In a similar trend, stock of the company was trading at Rs 32.20, up 0.47 per cent on the National Stock Exchange.
The proposed rights issue will allow Vodafone Idea to take on market competition intensified by Mukesh Ambani-led Reliance Jio. Also, Vodafone Idea has recently approached the the telecom department seeking two-year moratorium on its annual spectrum payment of about Rs 10,000 crore, citing high debt levels and stress on the balance sheet.
The rights entitlement is determined as 87 equity shares for 38 equity shares held by the eligible shareholders, it said.
The issue will open on April 10, 2019 and will close on April 24, 2019.
The promoter shareholders (Vodafone Group and Aditya Birla Group) confirmed their participation of up to Rs 11,000 crore and up to Rs 7,250 crore respectively; in excess of their combined current entitlement.
Furthermore, certain Promoter shareholders have also indicated that, in case the rights issue is undersubscribed, they reserve the right to subscribe to part or whole amount of the unsubscribed portion, subject to the applicable laws, the telecom company said.
Commenting on the development, Balesh Sharma, CEO Vodafone Idea, said, "The proceeds from the rights issue coupled with the monetisation of our stake in Indus will allow us to make the required investments in the business to achieve our strategic goals."
"We are moving faster than initially estimated on integration, and are well on track to deliver our synergy targets, the improving broadband coverage and capacity will enable us to offer a superior network experience to our customers as well as enhance our ability to add more broadband customer."
Earlier this month, the government cleared company's proposed foreign direct investment (FDI) of more than Rs 5,000 crore which may extend up to Rs 25,000 crore ahead of its proposed up to Rs 25,000 crore rights issue.
Edited by Chitranjan Kumar