InvestorQ : What is the total allocation of shares in Vodafone Idea to its British Parent?
Katherine Gonsalves made post

What is the total allocation of shares in Vodafone Idea to its British Parent?

rhea Babu answered.
4 weeks ago

With the company in heavy debt and also cash strapped, Vodafone Idea's shareholders have approved the allocation of equity shares worth Rs436.21 crore to its promoter, the Vodafone Group PLC of UK. As per details filed with the stock exchange, a total of 99.94% of Vodafone Idea shareholders approved this allocation of equity to Vodafone Group. The deal was done through a group company of Vodafone viz. Euro Pacific Securities. Currently, while Vodafone PLC holds 58.46% in Vodafone Idea, the Aditya Birla Group owns 16.53%.

As the first step, the company has relied on its promoters to raise the funds to keep the company afloat. For instance, Vodafone Idea has just raised Rs3,375 crore from Vodafone PLC of UK and Rs1,125 crore from the Aditya Birla Group. This is part of the attempts by Vodafone Idea to raise as much as Rs25,000 crore and the infusion by the promoters would give a comfort level to the other global investors to commit their monies. Vodafone Idea needs a massive infusion of funds if it really wants to stay afloat amidst debt.

To an extent, if Vodafone Idea is still surviving, it is because of the liberal reforms package that the government had announced. It may be recollected that the Indian government had announced a reform package in September 2021 and Vodafone Idea has been one of the biggest beneficiaries of this package. Under the terms and conditions of the package, the government of India has allowed Vodafone India to convert about Rs16,100 crore interest dues into about 33% stake in the company to sustain liquidity.

Debt remains the bugbear for the company. As on March 31, 2022, the total debt (including interest accrued but not due) of the Vodafone Idea stood at a whopping Rs197,878 crore. Its total payments over the next 12 months are about Rs8,160 crore. While high debt has been the bane of most telecom companies, it has just bitten Vodafone Idea sharply. It remains to be seen how they handle this situation.