Several Indian companies and multinational subsidiaries operating in India are gearing up for IPOs in the coming months, driven by the need to fund infrastructure projects amid India’s ongoing infrastructure boom.

Vodafone Idea (Vi), the third-largest telecom services provider in India with 213 million subscribers, has completed several significant capital-raising initiatives in 2024. The final stage of this effort, equipment-vendor financing, was wrapped up on July 18. Vi faces substantial financial commitments, including capital expenditures, debt servicing, 5G spectrum purchases, and payments to equipment vendors. The company has employed a multi-faceted approach to raise capital this year, involving asset sales, follow-on public offers, preferential equity sales to promoters, and equity allotments to equipment vendors, all of which have now been executed.

Vi’s financial struggles highlight the intense competition in the Indian telecom sector. Unlike its larger competitors, Reliance Jio (484 million subscribers) and Bharti Airtel (382 million subscribers), which have already completed their 5G rollouts nationwide, Vi has yet to begin its 5G deployment. Vi plans to start its 5G rollout within the next few months, with anticipated costs between $3 billion and $4 billion. Despite Hyundai India’s IPO later this year expected to set a record, Vi is poised to raise the largest sum in corporate India in 2024, amounting to INR 360 billion ($4.3 billion).

Unlike its better-capitalized competitors, Vi has struggled to turn a profit, largely due to aggressive pricing in the telecom sector. However, its ability to raise significant capital recently is noteworthy. A June 2024 presentation by Vodafone highlighted that Indian consumers use an average of 20 gigabytes of data per month, the highest globally, while paying the lowest data costs at an average of $2.10 per user per month. This is significantly cheaper than in Brazil ($5.70), China ($6.60), or the US ($45.60).

Vi notes that tariffs in India have increased by only 4% over the past 11 years, suggesting that a tariff hike is overdue. Anticipated revenue growth from increased tariffs, the launch of 5G services, and favorable government policies—such as reduced spectrum costs, extended amortization of dues, and the conversion of government debt into equity—have likely boosted investor confidence, leading to successful equity issuances.

On July 18, Vi announced the issuance of the first tranche of common stock to its equipment suppliers, Nokia Solutions and Networks India (NSNI) and Ericsson India, as part of its equipment-vendor financing strategy. NSNI received 256.7 million shares, and Ericsson received 158.4 million shares, raising a combined $80 million. This tranche is part of a larger issuance of 1.03 billion shares to NSNI and 633 million shares to Ericsson, with a total value of $300 million. Once fully allotted, NSNI will hold a 1.5% stake, and Ericsson will hold a 0.9% stake in Vi. This follows a $250 million equity sale to the Aditya Birla Group, one of the company’s promoters, with Vodafone Plc being the other promoter. Together, they hold a combined 37.3% stake, while the largest shareholder is the Indian government with a 23% equity stake. The government became a major shareholder after Vodafone Idea chose to convert interest on its debt to the government into equity rather than paying in cash. Vi’s total outstanding debt amounts to $26 billion, most of which is owed to the Indian government for spectrum purchases.

Vi’s recent stock issuance to NSNI, Ericsson India, and its promoters is part of a broader capital-raising strategy that also included two major fundraises earlier this year. In April, Vi raised $2.2 billion through a follow-on public offer (FPO) and subsequently sold 487 million shares, representing an 18% stake in Indus Towers, one of the world’s largest telecom tower operators, in mid-June. This sale generated $1.8 billion, which will be used to reduce Vi’s outstanding debt. Following this sale, Vi now holds a 3.1% stake in Indus Towers, down from a previous 21.5% stake, with Bharti Airtel now holding a 49% stake in the company.