The follow-on public offering (FPO) of Vodafone Idea saw a mixed response from the investors during the initial few hours of the first day of the bidding process. Bidding for the issue, which had kicked off for subscription on Thursday, April 18, was mostly led by institutional bidders. Telecom operator Voda Idea is selling its shares in the price band of Rs 10-11 apiece. Investors can apply for a minimum of 1,298 shares and its multiples thereafter. The Rs 18,000 crore FPO issue includes a fresh share sale of 16,363,636,363 equity shares, making it the largest follow-on offer of the Indian markets. According to the data, the investors made bids for 1,65,57,70,336 equity shares, or 13 per cent, compared to the 12,60,00,00,001 equity shares offered for the subscription by 14.30 pm on Thursday, April 18. The three-day bidding for the issue will conclude on Monday, April 22. The allocation for retail investors was subscribed only four per cent, while the portion reserved for non-institutional investors saw a subscription of merely 11 per cent. However, the portion set aside for qualified-institutional bidders (QIBs) attracted bids for 30 per cent, as of the same time. Vodafone Idea, Incorporated in March 1995, is a telecommunications player, which provides voice, data, and value-added services across 2G, 3G, and 4G technologies, such as short messaging and digital services for enterprises and consumers. Shares of Vodafone Idea commanded a grey market premium of Rs 1.70 per share ahead of listing, suggesting gains of around 15.45 per cent to the investors from the FPO price. However, the stock rose more than 4.8 per cent to Rs 13.54 during the trading session on Thursday. Brokerage firms are mostly positive on the back of anticipated tariff hikes, growth in average revenue per user (ARPU), capacity expansion and growth reduction plans. Analysts, tracking the issue, believe that the fundraising will help the company in its financial crunch. However, they anticipate user base growth and execution of revival plans will be key things to watch out. Vodafone Idea FO is a step in the right direction as it would help the company to improve its competitiveness in the near duopoly Indian telecom market. The company’s focus to improve its 4G penetration and launch 5G services in the next few quarters would enhance the ARPU which is lower than peers, said Manish Chowdhury, Head of Research at StoxBox. "We believe that Vodafone Idea would be in a better position to raise funds in future, both through equity and debt, to service its obligations and growth plan. The recent capital infusion by promoters and government’s efforts to keep the company as a going concern instils confidence about the turnaround prospects of the company," he said suggesting investors with moderate to high-risk appetite to subscribe for a medium to long term perspective. Vodafone Idea has reserved 50 per cent of the net offer for the qualified institutional investors (QIBs), while non-institutional investors (NIIs) will get 15 per cent of shares. Retail investors will get 35 per cent of the net offer. The telecom operator has raised Rs 5,400 crore from several institutional investors via an anchor book. Considering the near-term risks of continued losses, subscriber attrition due to lack of expansion of 4G services compared to its peers, VIL is a high-risk proposition in the short to medium-term, said Geojit Financial Services. "The long-term outlook will depend on the restructure of the debt and expansion in 4G & 5G offerings. Given the strong parentage support, we assign the subscribe rating for high risky investors on a long-term basis," it said. Axis Capital, Jefferies India and SBI Capital Markets are the book running lead managers of the Vodafone FPO, while Link Intime India is the registrar for the issue. The FPO shares will be listed at the bourses, both BSE and NSE, on Thursday, April 25, 2024.