Kolkata: Vodafone Idea (Vi) shares closed nearly 10% higher on the BSE Friday, amid unconfirmed speculation that the cash-strapped telco may finally be close to concluding at least a part of its much-delayed fundraising, market players said.
On Friday, the stock closed 9.86% higher at Rs10.36 after scaling an 11.24% intra-day high, amid unconfirmed buzz that the telecom JV between UK’s Vodafone Plc and the Aditya Birla Group might be close to wrapping up an initial funding of around $1 billion, via a potential qualified institutional placements (QIP) route. The Vi scrip has jumped over 21% since the start of this month – from Rs 8.53 on June 1 to Rs 10.36 on June 18.
“Markets these days largely run on expectations and euphoria and any near-term positive perceptions about Vi likely overcoming its immediate funding challenges could have triggered the sharp spurt in the company stock price today,” Deven Choksey, promoter of KRChoksey Wealth Managers told ET.
Spokespersons for Vi, Vodafone Plc and the Aditya Birla Group did not reply to ET queries till press time. The telco is yet to report its fiscal fourth quarter results, which is expected at the end of June.
Concerns over Vi’s Rs 25,000 crore fundraising plans, first announced last September, have been rising, given that the telco hasn’t been able to conclude any deals after talking to potential global investors such as an Oak Hill-led consortium, a host of US private equity firms including KKR, besides Canada Pension Plan Investment Board, Caisse de Dépôt et Placement du Québec and Norway’s Government Pension Fund Global. The talks were mostly around investments via convertible instruments.
Industry executives, bankers and fund managers say Vi’s leadership is still in talks with US private equity players, and that financial due diligence is still underway.
“Vodafone Idea needs to raise the stated Rs 25,000 crore funding in the short-term to refinance its upcoming NCD redemption, clear its sizeable AGR dues repayments and also invest in 4G networks to compete effectively with Reliance and Bharti Airtel, failing which it could face significant financial challenges,” Nitin Soni, senior director, at global ratings agency, Fitch, told ET.
The telco has been unable to increase tariffs meaningfully due to competitive pressures, even as it faces big payment obligations upwards of Rs 13,500 crore in the current fiscal itself. The telco is staring at a Rs 6,000-crore payout towards redemption of non-convertible debentures (NCDs) -- starting December 2021 -- and the first instalment of its Adjusted Gross Revenue (AGR) -linked repayments pegged at around Rs 7,500 crore, due by March 31, 2022.
Further, its annual spectrum payment instalments of about Rs 15,500 crore would start from FY23, once the two-year moratorium ends.
Industry analysts have maintained that fundraising has been a challenge for Vi, given its weak financial performance and rapid loss of users. Prospective global investors also want its co-promoters – UK’s Vodafone Plc and the Aditya Birla Group – to infuse some capital. However, both promoters have so far stuck to their stance not to put in fresh equity in the loss-making telco.
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