Vodafone Idea’s ₹1,980 Crore Fundraising Plan Brings Hope Amid Financial Struggles—Share Price Likely to Surge

Vodafone Idea’s stock is expected to draw significant attention on Tuesday, December 10, following the company’s announcement to raise ₹1,980 crore through a preferential share issue. The telecom operator’s board has approved issuing 175.53 crore shares to two Vodafone Group entities, Omega Telecom Holdings and Usha Martin Telematics, at ₹11.28 per share.

Key Details About the Fundraising

• Issue Price: ₹11.28 per share (including a ₹1.28 premium).
• Entities Involved:
  • Omega Telecom Holdings: Investing ₹1,280 crore; its stake in Vodafone Idea will rise from 0.40% to 1.98%.
  • Usha Martin Telematics: Investing ₹700 crore; its stake will increase from 0.13% to 1%.
• Relevant Date for Pricing: December 6, 2024.

The funds aim to help the debt-laden telecom operator overcome financial challenges. This move is seen as a positive step toward stability.

Vodafone Idea’s Performance in the Market

• Stock Trends:
  • The share price has dropped by 49% in the last six months.
  • It hit a 52-week high of ₹19.18 on June 28, 2024, but later declined sharply, reaching a 52-week low of ₹6.61 on November 22, 2024.

Q2FY25 Results: Key Highlights

• Loss Narrowed: Consolidated loss reduced to ₹7,175.9 crore from ₹8,746.6 crore a year ago, helped by higher ARPU following a tariff hike in July.
• Revenue Growth: Revenue rose to ₹10,932.2 crore from ₹10,716.3 crore in the same period last year.
• Tariff Hike Impact: Mobile service rates increased by 11-24% from July 4, 2024, leading to a 7.8% rise in ARPU to ₹166, compared to ₹154 in the previous quarter.
• Subscriber Base:
  • Overall subscribers declined to 20.5 crore from 21 crore in the previous quarter.
  • 4G subscribers decreased to 12.59 crore from 12.67 crore.

Outlook

While Vodafone Idea continues to face financial challenges, the fundraising effort is seen as a significant step in addressing its issues. Analysts and investors will be closely watching the stock, with hopes of improvement in operational and financial performance.