Nokia, Ericsson to get shares worth Rs 2,458 crore in Vodafone Idea in lieu of dues

Debt-ridden telecom operator Vodafone Idea will allocate shares worth Rs 2,458 crore to vendors Nokia India and Ericsson India to clear their partial dues, a regulatory filing said on Thursday.

The board of Vodafone Idea Ltd (VIL) has cleared allotment of shares on preferential basis at about 35 per cent higher price compared to the follow-on offer price of the company, and comes with a lock-in of 6 months.

Debt-ridden telecom operator Vodafone Idea will allocate shares worth Rs 2,458 crore to vendors Nokia India and Ericsson India to clear their partial dues, a regulatory filing said on Thursday.

The board of Vodafone Idea Ltd (VIL) has cleared allotment of shares on preferential basis at about 35 per cent higher price compared to the follow-on offer price of the company, and comes with a lock-in of 6 months.

"The Board of Directors of Vodafone Idea Limited today approved preferential allotment of about 166 crore equity shares of face value of Rs 10 each, at an issue price of Rs 14.80 per share, for an aggregate consideration of up to Rs 2,458 crore, to two of its key vendors, Nokia Solutions and Networks India Private Limited and Ericsson India Private Limited," the filing said.

Nokia and Ericsson will participate for up to Rs 1,520 crore and Rs 938 crore respectively, subject to approval by VIL shareholders at the EGM to be held on July 10, 2024, the telco said in a release.

"Nokia and Ericsson both have a long-term partnership with VIL, as key suppliers of network equipment, and this preferential allotment will enable VIL to clear part of their outstanding dues," the filing said.

Post this preferential issuance, the shareholding of Nokia and Ericsson in the company will be 1.5 per cent and 0.9 per cent, respectively.

The shareholding of VIL promoters -- Aditya Birla Group and Vodafone -- will stand at 37.3 per cent while government's shareholding will come down to 23.2 per cent and the balance 37.1 per cent will be public shareholding.

Earlier, VIL has issued Rs 1,600 crore worth optionally convertible debentures (OCDs) to mobile tower vendor ATC, out of which the tower vendor has picked stake worth Rs 1,440 crore in the debt-ridden telecom operator.

With this equity issuance, VIL has raised around Rs 24,000 crore of equity comprising OCDs issued to ATC India, Rs 18,000 crore FPO issue in April and preferential issue to promoters in May.

"Additionally, in line with its stated fund-raising roadmap, the company is in active discussions with its lenders to raise debt funding to the tune of Rs 25,000 crore. This comprehensive fund raise (equity and debt) will empower the company to work towards executing its well-defined strategy including expansion of its 4G coverage and launch of 5G services," the filing said.

VIL had 212.6 million subscribers as on March 31, 2024.

"VIL is all set to participate in the industry growth with right investments to expand its 4G coverage and offer 5G experience to its customers while remaining focused on its execution capabilities.

"As VIL embarks on its growth journey, support from key stakeholders is critical and the agreement with Nokia and Ericsson reaffirms these vendors as long-term partners of the company, and sets the stage for the next phase of our growth," VIL CEO Akshaya Moondra said.