Vodafone Idea May Issue Equity Shares to Nokia and Ericsson to Settle Dues – Big Move by Vi Board of Directors

Kolkata | Mumbai: Vodafone Idea (Vi) is considering issuing equity shares or convertible securities to Nokia and Ericsson to secure equipment for expanding its 4G network and rolling out 5G services, according to sources.

This plan aims to clear part or all of Vi’s payment dues to the two European telecom equipment suppliers, said an industry executive.

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Vi’s main vendors include Indus Towers, to whom the company owes about ₹10,000 crore. However, Vi has been paying its current rent to Indus Towers in full. The company owes ₹3,000 crore to Finland’s Nokia and ₹500 crore to Sweden’s Ericsson.

The struggling telecom company recently raised ₹20,075 crore through a public share sale and a preferential allotment to co-promoter Aditya Birla Group (ABG). Vi announced that its board will meet on Thursday (June 13) to discuss issuing equity shares and/or convertible securities on a preferential basis to vendors. Vi, Nokia, and Ericsson did not respond to questions from ET, and an Indus Towers spokeswoman declined to comment.

Potential Equity Dilution

A Mumbai-based research analyst estimated that if the preferential allotment is priced at ₹15 per share for ₹3,500 crore worth of shares, it would result in an equity dilution of about 2.8-3.0%. Another source mentioned that Vi might also consider issuing optionally convertible debentures (OCDs) to its European vendors to settle dues. Last year, Vi allotted ₹1,600 crore worth of OCDs to ATC Telecom Infrastructure Pvt Ltd, which were converted into a 2.87% stake and sold at an average price of ₹12.78 per share.

Market Reactions and Share Price

Analysts believe that Nokia and Ericsson might demand a significant discount on Vi’s current market price. On Tuesday, Vi’s shares closed nearly 2.5% higher at ₹16.20 on the BSE, giving the company a market value of nearly ₹1.08 lakh crore.

Recently, Vi issued equity shares to ABG at ₹14.87 per share. Its follow-on public offer, which was subscribed seven times, was priced at ₹11 per share.

These developments come as Vi is speeding up talks with Nokia and Ericsson to place new orders for 4G network upgrades and explore initial 5G contracts. Vi is also seeking to borrow ₹25,000 crore from banks and financial institutions and secure an additional ₹10,000 crore through non-fund-based facilities.

Vi plans to use the targeted ₹50,000-55,000 crore funding for capital expenditure over the next three years to improve 4G coverage, reduce customer losses, and start 5G rollouts in key markets. This is crucial for Vi to survive and compete with larger rivals Reliance Jio and Bharti Airtel, which have already launched nationwide 5G networks.