Telecom major Vodafone Idea's shares gained on Friday morning after the broad approved a ₹2,458 crore preferential allotment of equity shares to Nokia and Ericsson. 

What Happened: Vodafone Idea announced after market close on Thursday that its board had approved preferential allotment of around 166 crore equity shares to the company's equipement vendors.

The issue price of the allotment is ₹14.8 per share. The company said the allotment price is 35% higher than the follow on public offer (FPO) price of ₹11 and has a lock-in period of six months. 

Nokia will get ₹1,520 crore while Ericsson will acquire ₹938 crore in preferential shares. The equity allotment will be subjected to the approval of Vodafone's shareholders in an extraordinary general meeting on July 10. After the issue, Nokia will have a 1.5% stake in the struggling telco while Ericsson will hold a 0.9% stake. 

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After the preferential issue, the company will have raised  ₹24,000 crore of equity. Vodafone Idea raised ₹18,000 crore in its FPO in April. 

JP Morgan in its note stayed "underweight" on the stock with a target price of ₹7. As the research firm argued that equity story is complicated. The company still has $21 billion (around ₹1.75 lakh crore) debt where there is no clarity on repayment, JP Morgan said.

The brokerage also said further equity dilution cannot be ruled out. It also believe the repayments and clearance of past dues of Indus Towers could be delayed further.

Price Action: Shares of Vodafone Idea gained 1.62% to ₹16.33 on Friday morning.

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