Vodafone Idea fundraising: The shares of Vodafone Idea will be in focus today after the company on Tuesday, February 27, announced its intention to raise approximately Rs 45,000 crore through a combination of equity and debt, signalling a strategic move by the debt-laden telecom giant to expand its 5G network service and bolster its 4G coverage.

The company's board has greenlit a Rs 20,000 crore equity fundraising initiative, with participation expected from promoters or significant shareholders wielding influence over company policies.

Vodafone Idea, ranked third in India's telecom sector by subscriber count, affirmed its ongoing discussions with lenders to finalise the debt financing arrangements. In 2019, the company secured Rs 25,000 crore through a rights issue, supplemented by a commitment of Rs 2,000 crore from an unnamed promoter group entity in August last year.

Analyst Vivekanand Subbaraman from Ambit Capital expressed reservation, stating, "The portion of equity funds promised by promoters being only 10 per cent does not inspire confidence as to how the company will manage to raise the rest."

Nevertheless, the proposed capital infusion aligns with analysts' expectations of a Rs 40,000-50,000 crore investment, potentially enabling Vodafone Idea to narrow the gap with its larger competitors in terms of network capacity.

Vodafone Idea's CEO, Akshay Moondra, indicated during a post-earnings call last month that the company could launch its 5G services within six to seven months following the successful fundraiser.

In contrast, rivals Bharti Airtel and Reliance Jio have already introduced 5G services across most parts of India. For the December quarter, their average revenue per user (ARPU), a critical telecom performance metric, stood at Rs 208 and Rs 181.7, respectively, while Vodafone Idea's ARPU trailed at Rs 145.

As of the end of 2023, Vodafone Idea's total debt reached Rs 2.15 lakh crore, inclusive of deferred spectrum payment obligations to the government, while its cash reserves stood at Rs 319 crore for the same period.

Shares of Vodafone Idea settled 4.45 per cent lower at Rs 16.10 apiece on the NSE on Tuesday.

(With Reuters inputs.)