Readying a war-chest ahead of the proposed spectrum auction, Idea Cellular is looking to raise ₹750 crore by issuing shares to Malaysia’s Axiata Group Bhd, an existing investor in the company.
The company’s Securities Allotment Committee, which met on Tuesday, has decided to issue up to 5.18 crore shares for ₹144.68 on a preferential basis to Axiata Investments 2 (India) Ltd. This is subject to necessary approvals, the company informed the BSE on Wednesday.
Axiata Investments 2 (India) Ltd is a wholly-owned subsidiary of Axiata Group. The Malaysian group, which has controlling interests in many telecom companies across Asia, holds about 19.89 per cent stake in Idea Cellular with Axiata Investments 1 (India) holding 14 per cent and Axiata Investments 2 owning 5.9 per cent.
On June 5, Idea Cellular opened a qualified institutional placement, or sale shares to institutions, to raise ₹3,000 crore. The company’s seven circles are coming up for renewal in December 2015 and two circles by March 2016, and according to industry experts, Idea Cellular is augmenting its finances ahead of the next round of spectrum auctions expected late this year.
The company would be investing up to ₹3,500 crore by the current fiscal end, to build network and launch 3G services in Delhi by next year. Idea Cellular had also earmarked ₹3,500 crore as capital expenditure for FY15.
Nearing expiry dates Other operators were also gearing up for the possible spectrum auction as their licences are nearing expiry dates. For instance, Bharti Airtel – the country’s largest operator by users and revenue – hit the overseas bond market in January this year and raised €250 million.
Later in May, the New Delhi-based company concluded one of the largest overseas bond issue out of India by raising $1 billion in dollar bonds and another €750 million in euro-denominated bonds. These were mainly for refinancing and operational expenditures, as its two licenses expires this year and two circles next year.
Vodafone India, the second largest operator, is looking to a fresh infusion of capital from its British parent Vodafone Group. The GSM operator, apart from reducing its loans, is also gearing up for the spectrum auction as its licences in seven circles come up for renewal in December 2015.
Idea Cellular shares fell 1.14 per cent to close at ₹143.60 on a weak BSE, which ended down 0.43 per cent on Wednesday.