Vodafone Idea FPO gets Govt support; Fin Secy Somanathan says preserving competition is key

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vodafone Idea Ltd.’s upcoming ₹18,000 crore Follow on Public Offer (FPO) has received support from the government, which is the largest shareholder in the telecom operator.

Speaking exclusively to CNBC-TV18, Finance Secretary TV Somanathan said that preserving competition with multiple operators in the market is a major policy goal of the government.

Vodafone Idea will launch India’s largest FPO on Thursday, through which it aims to raise ₹18,000 crore. The telecom service provider intends to launch its 5G services post its FPO and have around 40% of its revenue via 5G services within the next 24 to 30 months.

The government owns a 32.19% stake in Vodafone Idea based on the March quarter shareholding pattern on the BSE. However, unlike other government holdings, that are in the name of the President of India, Vodafone Idea’s stake is administered by the Department of Investment and Public Asset Management or DIPAM.

Finance Secretary Somanathan said that the government is happy to see the capital investment plans of Vodafone Idea.

“India’s economic growth needs a thriving telecoms sector. We need multiple operators to preserve competition & protect consumers,” the Finance Secretary said.

The secretary also highlighted the government’s aim to preserve competition within the sector. “Preserving competition is a major policy goal of the government & is reflected in the September 2021 telecom package and the large cap infusion to BSNL,” he said.

Anchor book for Vodafone Idea’s FPO opened today.

The FPO is part of the company’s ₹20,000 fund raising plan via equity. Earlier, the company raised ₹2,075 crore through the issue of shares on a preferential basis to Oriana Investments, which is one of the promoter group entities.

Shares of Vodafone Idea are trading 1.5% lower at ₹12.95. The FPO opens on Thursday and the price band for the same has been fixed between ₹10 – ₹11 per share.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow