Vodafone Idea's Rs 18,000-Crore FPO Oversubscribed 5 Times on Final Day

Vodafone Idea's record-breaking ₹18,000-crore FPO oversubscribed 5 times, signaling investor confidence in the company's turnaround efforts and 5G plans, despite ongoing telecom sector challenges.

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Dil Bar Irshad
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Vodafone Idea's Rs 18,000-Crore FPO Oversubscribed 5 Times on Final Day

Vodafone Idea's Rs 18,000-Crore FPO Oversubscribed 5 Times on Final Day

Vodafone Idea's Rs 18,000-crore follow-on public offer (FPO) was oversubscribed 5 times on the final day, with investors bidding for 6,396.4 crore equity shares. The FPO, which is the largest ever in India, saw qualified institutional buyers (QIBs) oversubscribe by 14 times, while non-institutional investors (NIIs) took up over 3.4 times their quota. Retail investors, however, have so far taken up just 70% of their allotment.

The company raised Rs 5,400 crore from anchor investors, and a total of over Rs 12,000 crore by the end of the second day. The FPO proceeds will be used for expanding Vodafone Idea's 4G and 5G network infrastructure, as well as for deferred spectrum payments and general corporate purposes. "The fundraising will help Vodafone Idea better its 4G network and launch its 5G network, with plans to add 26,000 new 4G sites in the next two financial years," the company stated.

Why this matters: The strong investor response to Vodafone Idea's FPO indicates confidence in the company's turnaround efforts and future prospects, despite the ongoing challenges in the Indian telecom sector. The capital raised will be crucial for Vodafone Idea to compete effectively against rivals Reliance Jio and Bharti Airtel in the 5G era.

Major investors like GQG, Capital Group, and Fidelity showed strong buying interest in the FPO. Vodafone Idea's share price was trading down 5.04% at Rs 12.25 on the day of the FPO closing. The company is also likely to commence the process of raising Rs 25,000 crore in debt from banks soon, as part of its overall fundraising plan of Rs 45,000 crore through a combination of debt and equity.

Vodafone Idea's current debt stands at Rs 2.1 trillion, including over Rs 1.3 trillion for spectrum and Rs 65,000 crore as part of a revenue-sharing mechanism owed to the government. The successful completion of the FPO marks a significant milestone in Vodafone Idea's efforts to strengthen its balance sheet and position itself for long-term growth in the highly competitive Indian telecom market.

Key Takeaways

  • Vodafone Idea's Rs 18,000-crore FPO oversubscribed 5 times, led by QIBs and NIIs.
  • FPO proceeds to be used for 4G/5G network expansion, deferred spectrum payments, and corporate purposes.
  • Strong investor response indicates confidence in Vodafone Idea's turnaround efforts and future prospects.
  • Major investors like GQG, Capital Group, and Fidelity showed strong buying interest in the FPO.
  • Vodafone Idea also plans to raise Rs 25,000 crore in debt to strengthen its balance sheet.