Idea Cellular completed an allotment of 33 crore equity shares to the entities of Aditya Birla Group. Each share bore an issue price of Rs.99.50 share, aggregating a total of Rs.3,250 crore. The issue price includes the premium of Rs.89.50 per share.
Idea Cellular which is the telecom arm of the Aditya Birla Group made the announcement on Monday about the completion of the allotment of shares to the entities of Aditya Birla Group (ABG), amounting to 326,633,165 equity shares in total.
This preferential allotment raised the aggregate shareholding of the promoter group to 47.20% in the company from 42.40%.
As Idea prepares for the proposed merger with Vodafone India, the company announced its plans in January to raise over Rs.6,750 crore. On 4 January 2018, the board of directors gave approval for the preferential allotment of equity shares amounting to Rs.3,250 crore to the promoter group. The remaining Rs.3,500 crore will be done through preferential allotment, rights issue or qualified institutional placement. Any other avenue that the board sees fit might also be considered.
The aim of the promoter group’s equity infusion is to decrease the net debt of Idea thereby reducing the net debt that Vodafone will contribute to the merged entity by an equivalent amount.
Earlier in 2017, Vodafone and Idea had come to a consensus to sell their standalone tower businesses in India respectively to ATC Telecom Infrastructure for a total of Rs.7,850 crore. In March 2017, Idea and Vodafone announced their intention to sell their tower businesses in ordered to increase the strength of the balance sheet of the merged company.
According to Chairman of the Aditya Birla Group, Kumar Mangalam Birla, the infusion of equity emphasizes on the company’s commitment towards the telecom business. It also reiterates the confidence of the company in its prospective growth avenues. Through future plans of fundraising, the potential monetisation of the Indus stake, and the sale of the towers, Idea will be in a better position in terms of capital to take advantage of growth opportunities that arise in the telecom sector.