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Vodafone Idea rebrands self as ‘Vi’ in fresh start

Livemint/ New Delhi/Mumbai | ByIshita Guha and Anirudh Laskar
Sep 08, 2020 06:56 AM IST

The rebranding comes at a time the company looks to raise up to ₹25,000 crore to meet government dues, pay interest, and invest in operations.

Vodafone Idea Ltd on Monday rebranded itself as ‘Vi’, creating a unified identity two years after the merger of erstwhile Vodafone India Ltd and Idea Cellular Ltd. The company termed the rebranding as the final step towards integrating the two brands, which have had vastly different appeals among customer segments.

Vodafone Idea will initially raise hybrid debt through convertible bonds, two people aware of the matter said.(Reuters)
Vodafone Idea will initially raise hybrid debt through convertible bonds, two people aware of the matter said.(Reuters)

“The integration of the two brands is a culmination of the largest telecom integration in the world,” said Ravindar Takkar, chief executive, Vodafone Idea. “It’s time for a fresh start.”

“Your company is also embarking on a new brand identity to mark the culmination of the integration exercise bringing to customers the best of both brands,” chairman Kumar Mangalam Birla wrote to shareholders in the company’s annual report.

The rebranding comes at a time the company looks to raise up to 25,000 crore to meet government dues, pay interest, and invest in operations. Vodafone Idea will initially raise hybrid debt through convertible bonds, two people aware of the matter said.

“Vodafone Idea’s convertible bonds will offer an annual return of at least 10% like a conventional bond. The company’s proposed hybrid bonds will have tenures of around 10 years. The issuance will happen within the next 3-4 months,” one of the two people said.

“The chances of an equity investor will improve once the firm is able to improve its Ebitda, which at the current level is not enough to even service the finance costs on its total debt which exceeds 1.2 trillion,” said the second person.

Sudip Bandyopadhyay, group chairman, Inditrade Capital Ltd. said,” The convertible bond is the optimum structure for fund raise in VIL at this juncture when the risks are significant. It’s akin to a start-up with risk and uncertainties around its eventual survival. Post the first round of convertible bond raise, the business can focus on operational efficiencies and raising of ARPUs .....then the next round of funds can come through equity.”

“All options are open with potential investors,” said Takkar. “We definitely want the average revenue per user (Arpu) to improve to 200 initially and then to 300 eventually.”

The company is planning to raise $2.5 billion through convertible bonds, to be followed by a $2.5 billion through a qualified institutional placement (QIP) of shares, two people aware of the fund raising plans said. Vodafone Idea is working with InCred Capital for structuring the plan. //Are these the same two people quoted earlier? Or two other people?//

“The convertible bonds of Vodafone Idea will have an element of debt and an option to convert 25% of the amount into equity at a premium to the stock on the date when the conversion option is opted for. The bonds will earn the potential Vodafone Idea investors a fixed interest income every year and a return of the principal amount along with a premium on the date of maturity,” said the first person.

The $2.5 billion from the convertible bond issuance will be used primarily for paying regular spectrum charges and meet working capital needs.

Once ARPU and cash flows improve after revised tariffs, the borrowings will be gradually paid off, said the first person.

Romita Majumdar contributed to the story.

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