The Union Cabinet on Thursday approved foreign direct investment of up to Rs 25,000 crore by way of rights issue by Vodafone Idea, a move that is expected to give the telecom firm an edge in the competition intensified by Reliance Jio.
"The Cabinet has approved the proposal of Vodafone Idea Ltd, which had proposed foreign direct investment of more than Rs 5,000 crore which may extend up to Rs 25,000 crore," Finance Minister Arun Jaitley said.
Last month, the board of directors of Vodafone Idea Ltd had approved the Rs 25,000 crore fund raising plan by way of rights issue to the existing eligible equity shareholders.
The promoter shareholders Vodafone Group and Aditya Birla Group have told the board that they intend to contribute up to Rs 11,000 crore and up to Rs 7,250 crore, respectively, as part of such rights issue.
The promoter shareholders have also said that in case the rights issue is under-subscribed, each of the promoter shareholders reserves the right to take up part or whole of the unsubscribed portion, subject to stipulated law.
Vodafone Idea's board has authorised the Capital Raising Committee to decide the nuances of the rights issue, issue price, rights entitlement ratio, record date, timing of the issue and other matters.
Vodafone Idea has recently approached the telecom department seeking a two-year moratorium on its annual spectrum payment of about Rs 10,000 crore, citing high debt levels and stress on the balance sheet.