Idea Cellular (IDEA) announced that the board has approved raising INR32.5bvia issuance of preferential shares to the Aditya Birla Group (ABG) atINR99.5/share, implying 9% equity dilution. The board is also considering raising additional INR35b, implying further 9% dilution. In our view, equity dilution will take away potential gains from existing shareholders, as the telecom market is likely to bottom out in the near term.At the same time, we believe that fund-raising should provide IDEA with much-needed liquidity to ramp-up network and protect market share against its deep-pocketed peers, providing an edge in the current hyper-competitive market. IDEA's FY18 net debt-to-EBITDA is estimated at a steep 9.3x. However, the combined net debt post the merger with Vodafone could drop by INR225b toINR871b, with net debt-to-EBITDA declining to 4.2x in FY20 and ~3x by FY21.