Idea Cellular raises Rs3,250 crore through preferential allotment
12 February 2018
Idea Cellular, India's third-largest wireless operator by subscribers, has raised Rs3,250 crore through a preferential allotment of 326.6 million shares to promoter group and its entities. The shares were issued at Rs99.50 each.
With the preferential allotment, the shareholding of the promoter group in Idea has increased to 47.2 per cent from 42.4 per cent. The allotment of equity shares follows the company getting board approvals in January 2018 to raise a total of Rs6,750 crore to strengthen the joint company's balance sheet.
Idea Cellular had earlier announced its decision to merge with Vodafone India, the country's second largest operator by subscribers, to emerge as the leader in the country.
''This equity infusion reiterates the group's commitment towards the telecom business and confidence in its growth prospects. Idea is in the process of bringing a world class 4G network to villages, towns and cities across India that will contribute to the transition of the Indian populace towards a digital lifestyle. With the planned fund raise combined with the recently announced sale of Idea's towers and potential monetisation of the Indus stake, the company will be better capitalised to participate in the growth opportunities offered by the sector,'' said Kumar Mangalam Birla, chairman, the Aditya Birla Group.
Apart from the Rs3,250 crore, the company has proposed to raise another Rs3,500 crore, that will help it reduce its net debt.
Consequently, Vodafone's net-debt contribution to the merged entity will also be reduced by an equivalent amount.
Additionally, the recently announced sale of Idea's and Vodafone India's standalone towers to American Tower Corporation for about Rs7,850 crore and the potential monetisation of Idea's 11.15 per cent stake in Indus Towers, will further augment the long term capital resources of the company.
These proceeds will significantly strengthen the balance sheet of the merged entity (Idea and Vodafone India) leading to a more resilient entity for the future.