Vodafone Idea secures $646 million from big name investors

The sale has to be seen as good news for the cash-strapped Indian operator, which is desperate to raise money to pay off various bills and to fund the rollout of a 5G network that is starting to look like its last chance to stay even vaguely in touch with mobile market leaders Reliance Jio Infocomm and Bharti Airtel.

Late last week Vodafone Idea finalised plans to sell new shares worth as much as 180 billion rupees (US$2.16 billion) via a follow on public offering (FPO). The telco has been working on the plan for the past few months as it seeks to shore up a financial position that has looked woeful for years. The FPO will be open to retail investors from between 18 and 22 April.

Early on Wednesday though, they shared a list of 74 anchor investors – although there is some duplication in the list – that have bought into the FPO ahead of the offer period. In all, the institutions have committed INR54 billion ($646 million), some spending pretty big.

Top of the pile is US-based investment firm GQG Partners, which appears on the list in a number of places, having picked up around a quarter of the shares sold for a total of INR13.48 billion ($161 million).

Fidelity, in various guises, acquired INR7.7 billion ($93 billion) worth of shares, while names including Australian Super, Abu Dhabi Investment Authority, Morgan Stanley, Citigroup and Goldman Sachs also appeared in the line-up, albeit committing much smaller amounts.

16.2% of the shares sold, worth INR8.7 billion, went to five Indian mutual funds, the lion's share being accounted for by Motilal Oswal at INR5 billion, or 9.26% of the overall anchor investor portion.

The interest shown by the anchor investors surely bodes well for the broader share offer, which opens tomorrow.

Indeed, Livemint quoted an unnamed senior executive at Vodafone Idea as saying that "the anchor investor sentiment is an indication of the demand and a pre-cursor for the interest it may see among retail investors." The company's execs have been carrying out roadshows in India this week to drum up support for the FPO, which will be the country's largest to date.

If all goes well, we could see a 5G rollout from Vodafone Idea before the end of the year.

Earlier this week Money Control quoted Vodafone Idea CEO Akshay Moondra as saying that the telco will start to deploy 5G in select areas within six to nine months of the share issue. It has completed the minimum rollout obligations required by its licences and has carried out testing, he said, adding that it expects to cover 40% of its revenue base with 5G over the next 24 to 30 months.

It could still be too little, too late for the telco though, certainly if it has any thought of regaining its former scale. The latest TRAI figures show its market share has dropped to below 19%, leaving it in a distant third place behind leader Reliance Jio with just over 40% and Bharti Airtel with 33%. The big two are already talking about nationwide 5G coverage, or thereabouts; coverage of 40% of its revenue base in possibly more than two years still leaves Vi – to use the company's operating brand – trailing by some margin.

Essentially, the FPO is a step in the right direction for Vodafone Idea; without it, it would struggle to survive at all. But the telco's bigger rivals are making much longer strides.