FPO to put Vodafone Idea on growth path: SBI chairman

Kolkata: State Bank of India (SBI) chairman Dinesh Kumar Khara said the success of Vodafone Idea’s follow-on public offer (FPO) will put the telco in a different trajectory as it underlines the “leap of trust” of the larger investor community that stems from Aditya Birla Group chairman Kumar Mangalam Birla assuming chairmanship of the cash-strapped telco.

“We as bankers have lived through and considered the concerns relating to the entity (read: Vi), which it has gone through but I am very happy that the outcome has been nothing but a reflection of the trust and confidence shown by Mr Birla himself,” Khara said. The SBI chairman was speaking at an event to mark Vi’s FPO listing on the NSE Thursday.

He added that the “the leap of trust” seen from the larger investor community is essentially attributed to Birla assuming the chairmanship of Vi and showing the way on what should be done. “It’s also an unflinching commitment to the telecom sector which he has demonstrated via putting his personal money as well as sourcing the capital from across the globe. I think it’s not a small recognition.”

Khara said that the nation needs at least three (private) telecom providers, saying this is the wish of the government too. “But I think all that could not have happened unless Mr Birla would have shown his support.”

Earlier, Vi’s board had approved a preferential share issue to raise Rs 2,075 crore from an Aditya Birla Group (ABG) entity, which had set the stage for a wider funding programme critical for the company’s revival.

Vi’s FPO is expected to be followed by a Rs 25,000 crore debt issue, helping achieve the telco’s targeted Rs 45,000 crore fundraising drive aimed at regaining financial health and bolstering competition with bigger and profitable rivals Reliance Jio and Bharti Airtel.

According to the SBI chairman, digital is the future, and with that, the opportunity that exists in the country. “If at all our own investors would not have been there, the sector would certainly go away to foreign investors. Not that we are against it, we welcome them but at the same time we as proud Indians, we also should be the beneficiary of growth that will be seen in the sector.”

He added that retail participation in the fully subscribed portion (of the Vi FPO) is a reflection of trust that investors have in the Aditya Birla Group.