Vodafone Idea Ltd’s Rs 25,000 crore rights issue was oversubscribed before its close on Wednesday, according to a media report. The report said the issue received demand for shares worth Rs 26,950 crore, with public shareholders putting in demand for shares worth Rs 8,700 crore as against an allocation of Rs 6,750 crore, while the promoter groups putting in a bid for shares worth Rs 18,250 crore.
Meanwhile, Vodafone Idea on Wednesday said it will meet its funding requirements as well as other possible capital infusion plans through its Rs 25,000 crore rights issue. “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.
Separately, A Jefferies report on Wednesday said that the Indian telecom sector will require one more year for complete revival. “With (Reliance) Jio's focus remaining on subscriber addition, the market repair is still 12 months away. As we expect VodaIdea's market share to go below 25% over the next 18 months, it will require additional funding in FY21,” it said.
Jefferies forecasted that Jio would be the largest telecom company in India by market share in the fourth quarter of 2019, but did not expect the competitive intensity to decrease.
While Vodafone Idea's market share will fall to 20% by FY22, Bharti Airtel's will remain steady at 30%, the Jefferies report said.
It added that price hikes were unlikely this fiscal year and would happen only once Reliance Jio became the dominant player with over 40% market share, which is likely to happen in FY21.
The report highlighted that the first half of 2019-20 will see equity fund-raising of over Rs1 lakh crore led by separate rights issues by Vodafone Idea and Bharti Airtel of Rs25,000 crore each, and Reliance Jio’s demerged Fiber and Tower InVITs which will need equity funding for the majority of the Rs1.1 lakh crore liability.
“The funding reduces leverage for Bharti and Reliance but is inadequate for VodaIdea, in our view,” it said.
At presently, Vodafone Idea is the market leader with a 31.4% market share, followed by 30.6% of Bharti Airtel. Jio has a share of 29.2% with over 300 million subscribers.