VIL board eyes fundraising of up to Rs 500 crore from Vodafone Group

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The debt-ridden Vodafone Idea board is due to meet on June 22 to consider a proposal to raise funds worth Rs 500 crore from the Vodafone Group.

Fundraising will be through the issue of shares or convertible warrants on a preferential basis to one or more entities belonging to the Vodafone group (one of the promoters of the company).

“…A meeting of the board of directors of the company is to be held on Wednesday, June 22, 2022…to consider a proposal to raise funds totaling up to Rs 500 crore, by way of issuance of shares and/or warrants subscription rights on a preferential basis to one or more entities belonging to the Vodafone group (one of the company’s promoters),” VIL said in a filing to BSE on Sunday evening.

Over the past few months, Indian telecom operators have added more firepower to their arsenals as the market prepares for the rollout of 5G services that will usher in super-fast speeds and spawn new-era offerings and business models. .

The Cabinet last week approved the auctioning of waves capable of offering fifth-generation or 5G telecommunications services and gave its backing to the establishment of 5G captive networks by technology companies.

The auction of more than 72 GHz of spectrum will begin on July 26, 2022.

The Cabinet has approved the 5G auction at the reserve prices recommended by the sector regulator Telecom Regulatory Authority of India (TRAI).

The TRAI had recommended a reduction of around 39% in the reserve price or floor price for the sale of 5G spectrum for mobile services.

5G services will usher in ultra-high speeds, nearly 10 times faster than 4G.

Icra estimated that the telecoms industry is likely to shell out around Rs 1-1.1 lakh crore on the 5G auction, despite telecom operators’ reservations about high spectrum prices, and that the level of indebtedness of the sector is likely to increase with the next auctions.

After suffering a protracted financial crisis, telecom service providers – particularly Vodafone Idea – got a boost with the government last year when they approved a blockbuster relief package that included a four-year hiatus. for companies the payment of legal contributions, authorization to share the rare hertzian waves, modification of the definition of income on which levies are paid and foreign investment at 100 per cent automatically.

Following this, debt-ridden Vodafone Idea (VIL) opted to convert around Rs 16,000 crore of interest payable to the government into equity. As a result, the government will hold around 33% of the company’s capital.

Sources from the Department of Telecommunications (DoT) recently said that the proposal to convert VIL shares is in the final stages and that the required approvals on it are expected as soon as 7 to 10 days.

In March this year, the board of Vodafone Idea had approved raising up to Rs 14,500 crore, including Rs 4,500 crore from the promoter entities – Vodafone and Aditya Birla Group.

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