Vodafone's Rs 18,000 Crore FPO: To Subscribe or Skip?

Navigating the dynamic landscape of investment opportunities, Vodafone Idea's Follow-On Public Offering (FPO) emerges as a significant event in the financial realm.

With the aim to raise a substantial Rs 18,000 crore, the FPO has already garnered substantial interest from notable investors, including GQG Partners and UBS.

Vodafone Idea's Follow-On Public Offering (FPO):

The FPO opened aiming to raise Rs 18,000 crore, with Rs 5,400 crore already secured from 74 anchor investors. Notable investors include GQG Partners, The Master Trust Bank of Japan, and UBS.

The issue consists of a fresh issue of 1,636.36 crore shares, with subscription closing on April 22 and allotment expected by April 23. The price range for the FPO is set between Rs 10 to Rs 11 per share, with a minimum lot size of 1298 shares.

Considerations for Potential Investors:

Swastika Investmart Ltd cautions investors about challenges facing Vodafone Idea, such as consistent user base decline and impending financial crunch in 2026 due to spectrum and AGR dues.

Despite the attractive discount offered through the FPO, VI's path to near-term revival appears uncertain. Investors are advised to carefully assess VI's financial health and future liabilities before participating in the FPO.

Grey Market Premium (GMP) for Vodafone Idea FPO:

The GMP for VI FPO as of April 18th is Rs 1.70, suggesting an estimated listing price of Rs 12.70 considering the price band. It is anticipated that there would be a 15.45% gain or loss per share.

Details of Vodafone Idea FPO:

Proceeds from the FPO are earmarked for expanding network infrastructure, including setting up new 5G sites and bolstering the existing 4G network.

A significant portion of the proceeds, Rs 12,750 crore, will be allocated for purchasing equipment for network expansion, with Rs 5,720 crore planned for establishing the 5G network.

By fiscal year 2025, VI aims to set up 10,000 new 5G sites, with a target of establishing an additional 12,000 5G sites by fiscal year 2026. The company's financial situation may be improved by using a portion of the revenues to pay down debt.

5G Rollout Plan and Subscriber Coverage:

VI intends to provide 5G services to customers within the next 24–30 months, who now account about 40% of company income.

As soon as money is obtained, orders for 5G network equipment will be placed, and within six to nine months of the service's launch, 5G services should begin to roll out in certain locations.

Number of Subscribers and Market Share:

Vodafone Idea had more over 223.0 million users as of December 31, 2023, accounting for 19.3% of the subscriber market.

Note of caution:

Experts' and brokers' opinions are their own, and the India Today Group does not always agree with them. Before making any investing decisions, it is essential to speak with a licensed broker or financial advisor.