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Vodafone Idea’s Board Approves Rs 25,000-Crore Fundraise

The board of India’s largest telecom operator approved the proposal to raise close to Rs 25,000 crore, the bulk of it coming from promoters—Vodafone Group Plc and the Aditya Birla Group.

Vodafone Idea Ltd., with a market capitalisation of about Rs 30,000 crore, is looking to raise funds via rights issue, according to its exchange filing. The infusion is expected to be completed by March.

While the company hasn’t mentioned the purpose of fundraising, an analyst requesting anonymity told BloombergQuint that it would help it pare its gross debt of more than Rs 1,26,000 crore.

Vodafone Group and the Aditya Birla Group will contribute Rs 11,000 crore and Rs 7,250 crore, respectively, according to the statement. The rest will be raised from public. Grasim Industries Ltd. and Hindalco Industries Ltd. are the two listed Aditya Birla Group companies that hold stake in Vodafone Idea, with Grasim Industries holding 11.6 percent and Hindalco holding a 2.6 percent stake.

The fresh infusion will expand the equity base of the company by 45.8 percent, according to BloombergQuint’s calculation.

This will be the second fund infusion by promoters to pare debt. Earlier in 2018, Vodafone and Aditya Birla Group infused close to Rs 14,140 crore in their respective telecom operations to lower debt for the merger to go through. The companies started combined operations from Sept. 1, a consolidation that stemmed from the tariff war triggered by Reliance Jio Infocomm Ltd.

The fund infusion will also lower its leverage ratio but will still remain high at 23 times its earnings before interest, tax and depreciation and amortisation, according to BloombergQuint calculations. That’s higher than that of Bharti Airtel Ltd. and Reliance Jio.

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