Vodafone Idea’s ₹18,000 cr FPO was fully subscribed on day 3

Vodafone Idea’s follow-on offer (FPO) worth ₹18,000 crore was fully subscribed on the third day, with the cumulative demand schedule on the BSE showing that the issue was subscribed 2.18 times.

India’s largest FPO of the cash-strapped telecom company received a strong response from qualified institutional buyers (QIBs), with the quota subscribed 4.81 times.

As of 2:09 p.m., the quota from non-institutional investors had been subscribed 2.52 times. In total, investors made their bid for shares of Rs 2,150.5 crore against an offer of Rs 1,260 crore.

The QIB quota received the maximum response, with the category receiving bids for shares of Rs 1,423 crore against an offer of Rs 360 crore. The NII quota received share bids of Rs 673 crore against an offer of Rs 270 crore.

The company did not receive an overwhelming response from the retail investors as around 325 crore shares were bid for against 630 crore scrips in the offer, registering 0.52 times subscription.

Vodafone Idea Ltd has already raised ₹5,400 crore through the anchor book, with investors like GQG Partners, The Master Trust Bank of Japan, UBS and Morgan Stanley Investment Management participating in the anchor book, among others.

The third largest telecommunications services provider by subscriber base has allotted 490,90,90,908 shares to the anchor investors at the upper end of the price band, i.e. ₹11 per equity share.

A total of 74 anchor investors participated in the anchor book, raising ₹5,399 crore for the company.

Bids for Vodafone Idea’s FPO opened on April 18, 2024 and will close on April 22, 2024.

The floor price of the offer is ₹10 per equity share, and the board has approved the maximum price of ₹11 per share, with a minimum bid lot of 1,298 shares and in multiples thereafter.

Meanwhile, in intraday trade, the company’s shares fell 4.18% to ₹12.38 on the BSE on Wednesday, while its m-cap fell to ₹61,998.22 crore.

It was striking that Vi’s financing plan had been under consideration for quite some time. The capital increase is expected to boost capital investments and enable the rollout of 5G services. In addition, the company also faces a financial crisis in FY26 CL, when annual spectrum and AGR payments of $4 billion per year will expire unless the government converts the principal amount of debt into equity at the end of the moratorium.

The latest data from telecom regulator TRAI shows that Vodafone Idea (VIdea) reported a loss of 1 million subscribers to 221 million in February 24 and a loss of 17 million in the past 12 million.

In the third quarter of FY24, the telecom giant saw its net loss narrow to ₹6,985 crore from a loss of ₹7,990 crore in the same period last year. Average revenue per user (ARPU) rose 7.5% year-on-year to ₹145 from ₹135 in Q3 FY23.

The total share capital of the company stands at 5,012 crore shares (pre-sale), with promoter stakes of 40.06% and promoter group stakes of 8.69%. The public shareholders of the company stand at Rs 2,560 crore. Post-offer, following the offering of 16,36,36,36,363 equity shares, the total share capital will increase to Rs 6,648 crore, with the promoter holding 30.30% and the promoter holding 6.57%.