By Vaughan O’Grady

Indian operator Vodafone Idea’s Rs 5,400 crore (about US$645.5 million) offer of shares to anchor investors was fully subscribed on Tuesday.

According to India’s Economic Times news service, Tuesday’s offer was the third-largest anchor book in India.

A number of major foreign institutional investors and domestic mutual funds got involved and the government of India, the largest shareholder in Vodafone Idea (aka Vi) with a 32% stake, made clear its support for the carrier’s fundraising efforts.

It appears to be bode well for Vodafone Idea’s plans (reported here on Monday) to raise as much as Rs18,000 crore (just over US$2.1 billion) this week in what is expected to be India’s biggest follow-on public offering (FPO). There will also be preferential allotment of Rs2,075 crore (about US$248.1 million) to one of its founder entities. This will be followed by a Rs25,000 crore (not far short of US$3 billion) debt funding.

Analysts have argued that the government’s decision to convert Vodafone Idea’s liabilities into equity has boosted investor confidence. Certainly, following this success, a positive response to the FPO should boost Vodafone Idea’s plans to start rolling out 5G within six to nine months of completing the fundraising.

But can it generate the cash flows needed to pay spectrum payments and AGR dues once the moratorium on both ends in 2026? The company also needs to repay vendors, strengthen its 4G network, fund the rollout of its 5G services (which is well behind its rivals Bharti Airtel and Reliance Jio) and arrest subscriber losses.

However, the success of the fundraise so far may allow the company to feel a little more positive about its prospects. https://developingtelecoms.com