Vodafone Idea Ltd sold shares worth Rs 5,400 crore to institutional investors in the first stage of its Rs 18,000 crore follow-on public offering (FPO). US-based GQG, run by Rajiv Jain, was allocated shares worth Rs 1,348 crore, as per Voda Idea's statement released. Fidelity was allocated shares worth Rs 832 crore, while Motilal Oswal got shares worth Rs 45.45 crore, the statement showed.
The shares were sold at Rs 11 each, the upper end of the Rs 10-11 price band. Voda Idea's stock ended at Rs 12.95 on Tuesday (April 16). Bidding for retail investors will be at the same price band and open between April 18 and April 22. Domestic benchmarks were closed on Wednesday (April 17) due to Ram Navami.
The telecom operator has said it plans to raise Rs 45,000 crore, via equity and debt, to help expand its 4G network and roll out 5G services. It is planning to roll out its 5G services in select areas over the next six to nine months.
Voda Idea CEO Akshaya Moondra said that the 5G rollout could cover 40 per cent of the company's overall revenue base in the next 24-30 months.
Rolling out 5G is one of the objectives of the fundraising and around Rs 5,720 crore from the FPO proceeds will be used for the rollout, he mentioned.
This assumes significance as the company's rivals – Reliance Jio and Bharti Airtel – both have already rolled out 5G services.
Vodafone Idea was formed in 2018 when Vodafone Group merged its India business with Idea Cellular. The company, in which Vodafone owns more than 25 per cent, is the country's third-biggest operator.
Brokerage view
Domestic brokerage IIFL Securities has upgraded Voda Idea shares' rating to 'Add' with a target price of Rs 14. It also recommended retailers to subscribe to the FPO offer.
"Equity infusion in Vi (to be likely followed by debt raising) is likely to result in Rs 45,000 crore funding and should enable Vi to narrow the 4G coverage/capacity gap with peers. This would not only arrest sub losses but also enable faster upgrade of 2G users to 4G. Direct tariff hikes, coupled with this upgrade, should drive Vi's ARPU from Rs 145 in Q3 FY24 to Rs 241 in FY27," IIFL Sec stated.
The brokerage has also upgraded its rating on Indus Towers to 'Buy' with a target price of Rs 379, suggesting that it may benefit from Voda Idea's improved financial position and subsequent rollouts.
In addition, IIFL Sec has raised Airtel's target price to Rs 1,379 and Jio's enterprise value to $104 billion.