New Delhi: The Union Cabinet has cleared an FDI proposal of telecom giant Vodafone Idea Ltd (VIL) ahead of its proposed up to Rs 25,000 crore rights issue.
“The Cabinet Committee on Economic Affairs chaired by the Prime Minister has approved the FDI Proposalfor Foreign Direct Investment of more than Rs 5000 crore and up to Rs 25000 crore in M/s Vodafone Idea Limited (VIL) as part of a proposed equity fund raise by way of a Rights issue of equity shares and/or other equity linked securities to eligible shareholders of the company,” an official release said.
It also approved to take on record the proposed changes in the indirect foreign investment in the subsidiaries of VIL, which will take place on account of non-residents subscribing to the equity shares in the Fund Raise.
British telecom major Vodafone holds 45.1 stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group controls 26 percent and Idea shareholders own 28.9 percent.
The approval will also result in the change in the indirect foreign investment in the subsidiaries of VIL which will take place on account of non-residents subscribing to the equity shares in the Fund Raise.
Last month, the board of directors of VIL had approved Rs 25,000 crore fundraising plan by way of rights issue to the existing eligible equity shareholders.
FDI up to 100 percent is allowed in Telecom Services Sector wherein 49 percent under automatic route and beyond 49 percent through government route subject to observance of licensing and security conditions by the licensee as well as investors as notified by the Department of Telecommunications (DoT) from time to time.
Further, the 100 percent FDI has been approved in the Company. However, in consideration of the extant FDI Policy and procedure, it is necessary to take the Government approval for FDI beyond Rs. 5000 crore even if there is no change in the percentage of foreign/ NRI equity already approved.