Coming as a sigh of relief, Vodafone Idea shareholders have approved a fund raise of Rs 20,000 crore.

This development could potentially unlock revenue opportunities for multinational telecom gear vendors such as Nokia and Ericsson.

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As the news of the fund raise came out, the shares of Vodafone surged over 2% to Rs 13.7 per share. Notably, so far this year, the stock of Vodafone Idea has declined more than 13%.

“An Extraordinary General Meeting of Vodafone Idea Limited was held today, that is, Tuesday, April 2, 2024, at 3.00 p.m. through Video Conferencing (VC) / Other Audio Visual Means (OAVM) in accordance with the relevant circulars issued by the Ministry of Corporate Affairs and the Securities and Exchange Board of India,” said the filing on Wednesday.

The funds will allow the telecom major to expand its 4G network and rollout 5G services. Analysts suggest that these moves could help the company regain some of its competitive edge by offering a better experience to its users.

Vodafone Idea, the firm in which the Indian government holds just over 33% equity stake, intends to secure Rs 45,000 crore via a blend of equity and debt to match the offerings of competitors Jio and Bharti Airtel and potentially curb subscriber attrition.

The capital infusion will equip Vodafone Idea with resources to enhance its competitive stance in the telecom sector, where it trails significantly behind larger rivals Reliance Jio and Bharti Airtel.

Nuvama Institutional Equities said, “Both Bharti and Jio have already rolled out 5G in 5,000-plus cities and towns, and there is an urgent need for VIL to incur capex for 5G rollout and to upgrade the 4G network. The company needs to improve both its operational and financial metrics, to withstand competition.”

In February, Vodafone Idea said its board had approved raising up to Rs 20,000 crore in equity from promoters and other investors by June, with the aim of bolstering finances for the long-awaited 5G rollout and fortifying its 4G services.

Vodafone Idea is grappling with financial challenges, burdened by a debt of Rs 2.1 trillion, quarterly losses, and ongoing subscriber loss.