Shareholders of Vodafone Idea, a company that is not doing so well recently, have a ray of hope now. This is because the board of directors will meet on April 6 to decide on the proposal to issue equity shares or convertible securities on preferential basis. During the company’s Extraordinary General Meeting (EGM), which was held on April 2, the company’s shareholders had approved raising up to Rs 20,000 crore by issuing securities. A statement issued by Vodafone India to the stock market said, “We would like to inform you that the meeting of the Board of Directors of the company is going to be held on Saturday, April 6. In this, the proposal to issue equity shares and/or convertible securities on preferential basis will be considered.”
Vodafone Idea has been going through a financial crisis for the last few years, hence the shares of the company have fallen significantly. In 2018, the company’s shares were trading around Rs 70, but now the price is around Rs 13.85 till the filing of this report. After the news of fund raising of Rs 20,000 crore spread on Tuesday, there was a substantial rise in shares on the very next day.
Vodafone Idea, in an effort to retain customers, cited the voting results of the EGM in the notice, where 99.01 percent votes were cast in favour of the resolution related to issuance of securities up to an aggregate amount of Rs 20,000 crore. The approval comes at a time when the debt-laden company is planning to raise Rs 45,000 crore through equity and debt to match the services offered by rivals Reliance Jio and Bharti Airtel and retain long-term customers.
It is noteworthy that the company had said in February this year that its board of directors has approved raising equity capital of up to Rs 20,000 crore from promoters and other investors by June. The company needs capital to implement 5G and strengthen 4G services. Vodafone Idea has a debt of Rs 2.1 lakh crore and is constantly losing out on its customer base.
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