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‘Rights issue, monetisation to meet fund needs’

‘Rights issue, monetisation to meet fund needs’

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  25 April 2019 8:34 AM GMT

New Delhi: Vodafone Idea, the country’s largest telco by subscribers, on Wednesday said that it will meet its funding requirements as well as other possible capital infusion plans through its Rs 25,000-crore rights issue, which closes today. “We are raising capital via this rights issue, further monetisation of our stake in Indus Towers will add to the liquidity. We believe that these, along with the cash flows from our operations, will be sufficient to meet our funding for the foreseeable future. Additionally, we also have the option to monetise our fibre assets,” Akshaya Moondra, Chief Financial Officer, Vodafone Idea Ltd said.

The company has 1.58 lakh kms of fibre network. It expects Rs 5,500 crore through its 11.15 per cent Indus Tower stake sale in 3-4 months, though the exact realisation will depend on Bharti Infratel’s stock price.

Under a contract signed with Bharti Infratel in April 2018, the company has an option to sell its stake in Indus Tower for cash ahead of the merger of the country’s largest mobile tower firm with the Bharti group firm.

Moondra earlier told IANS that he expected the rights issue to be fully subscribed. Early morning shares of Vodafone Idea was up marginally at Rs 17.10.

While the company believes that its Rs 25,000-crore fund raising will create a strong enough war chest and capitalisation to manage the high intensity competition in the low-priced Indian telecom market, analysts have a different take. “Vodafone idea is very stretched because their Ebitda has fallen to about $650 million(around 4,455.8 crore), their debt is also quite high and their leverage as measured by debt-to-Ebitda too is high,” said Nitin Soni, Director for corporate ratings at Fitch Ratings.

Soni said the amount was insufficient and it might have to raise more money in future because the company’s capex plan was about $3.5-4 billion. (IANS)

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