Bengaluru: Sending its share prices crashing, Vodafone Idea Ltd announced plans on Wednesday to generate around Rs 25,000 crore from its shareholders by issuing fresh equity at a sharp 61 percent discount. The rights issue of India's largest telecom firm by subscribers is the second major fundraising by a telco from the country this year following a similar proposal by Bharti Airtel Ltd to reduce debt and fund operations in a market hit by steep price competition.
Vodafone will issue 2,000 crore new shares at Rs 12.5 each to existing shareholders, the company said in a statement.
Vodafone will use the funds generated to bring down its massive debt of more than Rs 1,23,660 crore. Vodafone Group and the Aditya Birla Group would put in Rs 11,000 crore and Rs 7,250 crore, respectively, the statement added.
Telecom firms in the country are looking at ways to shore up balance sheets and pare debt when the industry is struggling with a price war as a result of Reliance Jio Infocomm Ltd's foray into the market
As a result, Idea Cellular's last year merged with Britain's Vodafone Group Plc's Indian operations in a deal worth around US$ 23 billion. Part of a plan to raise US$ 4.6 billion, the conditions of the sector also prompted Bharti Airtel to sell US$ 525 million of its stock to Singapore Telecommunications Ltd (Singtel).
Vodafone Idea'stock plunged as much as 7.6 percent to Rs 29.60 Following Wednesday's news. This was its sharpest intraday fall in nearly two months.