Idea Cellular To Raise Rs 3,250 Crore Selling Shares To Promoter Entities

Idea Cellular Ltd. will raise Rs 3,250 crore by selling shares to the Kumar Mangalam Birla-led promoter group to boost capital even as it integrates operations with Vodafone India Ltd. to compete in a market disrupted by a tariff war.

The telecom operator's board approved issuing 32.66 crore preferential shares at Rs 99.50 apiece to all or any of Birla TMT Holdings Pvt Ltd., Elaine Investments Singapore, Oriana Investments Singapore, Surya Kiran Investments Singapore, the company said in an exchange filing. It also set up a panel to consider options to raise an additional Rs 3,500 crore via a preferential issue, a qualified institutional placement or a rights issue.

The proposed fund-raise along with the sale of Idea's standalone towers sale to ATC and the potential monetisation of its 11.15 percent stake in Indus Towers Ltd. will augment the long-term capital resources, the company said. It will be used to strengthen the balance sheet of the merged entity, Vodafone India said in a separate statement.

Fresh equity funding will allow Idea Cellular to better defend its revenues and market share, JM Financial said before the company announced the share sale. The proposal appears to be driven by merger conditions, and not by immediate cash crunch or any covenant breach, it said.

Here are the other highlights:

• Preferential issue is expected to be completed by early February.
• Promoter holding in Idea to increase to as much as 47.2 percent from 42.4 percent post the preferential issue.

Shares of Idea Cellular rose as much as 2.8 percent to Rs 105.6 after the announcement.