Idea Cellular to raise Rs 3,500 crore through QIP

Aditya Birla group telecom company Idea Cellular on Wednesday said it will raise Rs3,500 crore by issuing equity shares to eligible investors through qualified institutional placement (QIP).

Idea had on Monday raised as much as Rs3,250 crore by allotment of shares to entities of promoter group.

"The board of directors today accorded final approval for issuance of equity shares for an amount not exceeding Rs3,500 crore by way of QIP to the eligible investors," Idea said in a notification to the BSE on Wednesday.

Last month, the company's board had approved a proposal to raise up to Rs6,750 crore.

Idea is in the midst of a proposed merger with Vodafone India following a stiff competition started by the new entrant Reliance Jio.

The funds are likely to meet part of financial obligations under its merger deal with Vodafone. The two parties have agreed that Aditya Birla Group (ABG) will buy a minimum of 2.5 per cent of the merged entity from Vodafone for Rs1,960 crore. This equity transaction will reduce Vodafone Group's debt funding requirements from Rs9,350 crore to Rs7,390 crore.

The proceeds will also enable Idea Cellular to reduce its debt. The net debt of Idea as of 31 December 2017, stood at Rs55,781.8 crore.

"This equity infusion reiterates the group's commitment towards the telecom business and confidence in its growth prospects. 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," ABG chairman Kumar Mangalam Birla had said on Monday.

Additionally, the recently-announced sale of Idea's and Vodafone India's standalone towers to American Tower Corporation for an aggregate enterprise value of 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," Idea had said.

For the third quarter ended December, Idea Cellular had reported a loss of Rs1,285.6 crore mainly due to reduced interconnection charges and stiff competition leading to huge tariff cuts.