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April 25, 2024

Vodafone Idea’s “Smart Turnaround” with Rs 18,000 Crore FPO: K M Birla

Vodafone Idea, the telecom giant, is gearing up for a “smart turnaround” following its successful raising of Rs 18,000 crore through a follow-on public offer (FPO). Kumar Mangalam Birla, chairman of Aditya Birla Group, expressed optimism about the company’s future trajectory, emphasizing that India “deserves” three private telecom companies. The announcement was made during the FPO ceremony held in Mumbai.

Birla highlighted the longstanding commitment of Aditya Birla Group to the telecom sector, with cumulative investments of around Rs 170,000 crore in the Indian telecom industry alongside its partner, Vodafone Group. Out of the Rs 30,000 crore raised by Vodafone Idea in the last five years, more than 75 percent has come from the two promoter groups. The recent fundraise also witnessed an investment of over Rs 2,000 crore from Aditya Birla Group, demonstrating their continued belief in India’s digital potential.

“The proceeds from this fundraiser will be utilized for significant capital expenditure, focusing on network and technological upgrades across key markets. This investment will enhance operational efficiencies, leading to better performance and triggering a cycle of growth,” Birla explained.

Post FPO, the Indian government’s stake in Vodafone Idea has diluted to 24 percent, while Vodafone PLC’s stake stands at 23 percent. The Aditya Birla group will hold an 18 percent stake post-dilution.

Birla hailed the successful conclusion of India’s largest FPO as a turning point for the telecom industry, attributing it to the government’s vision of a digital India. The oversubscription of the FPO, with the overall book being subscribed seven times and the institutional book nineteen times, underscores the tremendous potential of India’s digital story and Vodafone Idea’s role in it. The robust engagement from both foreign and domestic investors, including the full subscription of the retail portion, reflects confidence in the company’s future.

Vodafone Idea’s journey has been significantly influenced by the government’s reform package, which Birla described as transformational for the sector. “The policy environment now encourages investment, innovation, and competition. India’s digital economy is booming, and robust telecom networks are crucial to support this growth. A nation of 1.4 billion people deserves three private telecom players,” he emphasized.

In conclusion, Vodafone Idea’s FPO marks a new beginning for the company, signaling its determination to adapt and thrive in the dynamic telecom landscape of India. With a renewed focus on capital expenditure, network upgrades, and operational efficiency, the company is poised for a “smart turnaround” that aligns with India’s digital aspirations and fosters healthy competition in the telecom sector.

Jhumpa Lahiri

Jhumpa Lahiri

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