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Voda Idea rights issue subscribed 1.07 times at close: Bankers

NEW DELHI: The Rs 25,000-crore Vodafone Idea rights issue was subscribed 1.07 times at close of subscription on Wednesday, bankers familiar with the matter said, as India’s largest telco sought to raise funds to repay debt and ease financial pressure to effectively take on rivals Reliance Jio and Bharti Airtel.

“The non-promoter portion was subscribed 1.18 times. This number may still go up marginally later in the day,” one of the bankers said.

Another person said that the Rs 25,000-crore rights issue received bids worth some Rs 27,000 crore.

Vodafone Idea didn't immediately respond to emailed queries for comment.

But data on the stock exchanges at issue close on Wednesday showed that the issue had received cumulative bids on BSE and NSE for 16,01,67,80,185 shares compared with the 19,999,830,911 shares on offer.

The rights issue, the largest-ever by any company in the country, was priced at Rs 12.50 a share and had opened on April 10.

In early trade Thursday, shares in the company were down 2.3 per cent to Rs 16.80 on BSE. On Wednesday, the stock had closed 0.9 per cent higher on at Rs 17.20.

Vodafone Idea has said that its promoter shareholders -- Vodafone group and Aditya Birla Group-- will participate for an amount of up to Rs 20,000 crore in the issue, instead of the previously announced amount of up to Rs 18,250 crore, in which Vodafone was to subscribe to shares worth Rs 11,000 crore, with its partner taking the rest. The company has also said that its promoters will subscribe to any of the unsubscribed portions.

Malaysia’s Axiata Group Berhad has already decided not to participate in the rights issue, renouncing its shares entitlement in favour of investors through transactions on BSE, reducing its stake in the company to roughly 2.6 per cent from 8.1 per cent.

The promoters have already taken capital markets regulator Sebi’s approval to take their holding in VIL up to 90 per cent after the rights issue – if required – but would need to bring it down to 75 per cent or below to conform with the rules. The promoters currently hold 71.33 per cent in VIL.

The fundraising comes at a time when the industry is bleedings from a massive disruption caused by the entry of Reliance Jio two years ago. Vodafone Idea, whose losses widened to over Rs 5,000 crore in the October-December quarter with debt at Rs 114,760 crore at the end of December, plans to use most of the funds–nearly Rs 19,000 crore—to repay debt, including spectrum dues, while the rest would be for general corporate expenses.

The competition and financial stress forced Vodafone India and Idea Cellular – then India’s No. 2 and 3 telcos – to merge in late August last year.
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