Idea Cellular has announced that the telecom company is planning to raise Rs 3,250 and will invest another Rs 3,250 before a merger with Vodafone India Ltd.
According to a statement issued by the company, “The board constituted a panel to evaluate ways to raise an additional Rs 3,500 crore. The proposed capital raising by Idea, the sale of its standalone towers to American Tower Corp and the potential sale of its 11.15 percent stake in Indus Towers Ltd will augment the firm’s long-term capital resources.”
As per some experts, the fund infusion was necessitated by the fact that Idea needed to expand its product offerings and strengthen its telecom infrastructure.
“At a time when the telecom industry is going through a challenging environment, this equity infusion by the group in Idea is another step towards reinforcing the group’s commitment,” Idea Cellular chairman Kumar Mangalam Birla said.
As a result of the change in shareholding in Idea following the proposed capital raise, Aditya Birla Group (ABG) and Vodafone Group have agreed that ABG will buy a minimum of 2.5 percent of the merged entity from Vodafone, or such stake as required in order for ABG to ultimately own at least 26 percent of the merged entity, Vodafone said in a statement.
Vodafone India and Idea Cellular Ltd are merging their businesses to create India’s biggest phone company with over 400 million customers.