Strong anchor book subscriptions demonstrate confidence in long-term business planning: Moondra, ET Telecom

MUMBAI: Active subscription for Vodafone Idea (Vi) stake sale by anchor investors from foreign institutions, Indian fund houses and insurance companies is a sign of their confidence in the company's long-term business plan, says top management. Director Akshaya Moondra said.

“The anchor book was strong. Major foreign investors include GQG, Fidelity Management Research, UBS and RWC. India has HDFC Mutual Fund, Motilal Oswal Mutual Fund and Quantitative Mutual Fund. Additionally, SBI There are also life insurance companies like Sogo and ICICI Plu Life. Some have shown interest from the HNI segment,” he told ET.

He did not say the ongoing fundraising is a turnaround moment for the cash-strapped carrier, but it is a culmination of all the milestones that have put the company on a growth trajectory for more than 10 quarters. He said that.

“This event allows us to get back into investing and participate in the growth of the industry in a way we haven't done before,” Moondra said.

Vi on Tuesday raised Rs 5,400 crore from 74 anchor investors, making it the third-largest anchor book after One 97 Communications and Life Insurance Corporation. Vi plans to raise up to Rs 18,000 crore through India's largest follow-on public offering (FPO), which will begin on April 18 and end on April 22.

An additional Rs 2,075 crore will be raised from the promoter entity, Oriana Investments Pte Ltd of Aditya Birla Group.

The company is also in talks to raise debt financing from banks to Rs 25,000 crore.

“We have been working with financial institutions for quite some time, and in fact they have evaluated our business plan in the past. “We will focus on raising funds,” the executive said.

Regarding the use of funds, Vi has earmarked Rs 5.72 billion of the Rs 18,000 crore expected to be raised in the subsequent public offering for 5G deployment. Overall, the company plans to spend Rs 12,750 crore (about 71% of total funds) on network expansion capex over the next two fiscal years, the company said.

Moondra said that upgrading from a low-value 2G base to 4G will go a long way in increasing ARPU (average revenue per user).

“…we have 42% 2G subscribers, so we have disproportionate access to another stream of ARPU improvements. Upgrading this 42% subscriber base is our biggest opportunity,” he said. Told.

Securities firm IIFL Securities has upgraded Vodafone Idea (Vi) to 'ADD' with a target price of 14 rupees and recommended investors to subscribe to the telecom company's FPO.

“Two tariff hikes are expected in the next three years, which will benefit all three telcos. There is a good chance that AGR debt will be reduced, which is positive for Bharti and Vi.” said the securities company.

With this funding, IIFL expects Vi to increase the number of mobile broadband locations from around 170,000 currently to 250,000 over the next two years.