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<ul><li><keyword id="1553175" type="General" weightage="100" keywordseo="vodafone-idea" source="Orion">Vodafone Idea</keyword>’s shares zoomed on Monday after the government agreed to convert interest dues worth ₹16,133 crore into equity.</li><li>The equity conversion will make the government the largest shareholder of Vodafone Idea, with a 33% stake.</li><li>The government will remain a passive investor, leaving the Aditya Birla Group and Vodafone Plc as the primary decision makers of the telco.</li></ul>Vodafone Idea’s shares zoomed by 25% on Monday hitting an upper circuit, after the government agreed to convert interest dues worth ₹16,133 crore into equity. The move breathed a fresh lease of life into the telco’s attempts to raise funds to make payments to vendors and sign contracts with telecom equipment makers and roll out its 5G network. The share price of the troubled telco is back to its December 2022 levels, erasing the losses it saw this year, so far. <div type="image" title="Vodafone Idea share price April 2022 to Feb 2023." msid="97642952" hostid="261" caption="&amp;lt;p&amp;gt;Vodafone Idea share price in FY23&amp;lt;/p&amp;gt;"></div> “The total amount to be converted into equity shares is ₹16133,18,48,990. The Company has been directed to issue 1613,31,84,899 equity shares of the face value of ₹10 each at an issue price of ₹10 each,” Vodafone Idea said in an exchange filing on February 3. The equity conversion will pave the way for the government to become the largest shareholder of Vodafone Idea, long after the telecom reforms package was <a href="https://www.businessinsider.in/business/telecom/news/telecom-relief-package-airtel-vodafone-idea-get-four-year-moratorium-on-agr-dues/articleshow/86227218.cms">announced in September 2021</a>. As a result of this, the Aditya Birla Group’s stake will stand at 31.8%, while Vodafone Plc’s stake will be at 18.3%. This is a reduction from the existing stake of 75% held by the two promoters. <div type="Article" hostid="261" msid="86221662" title="Government picking up a stake in Vodafone Idea ‘might be a remedy worse than the disease’, say experts" mstype="2" mssubtype="0"></div> However, Aditya Birla Group, and Vodafone Plc, will continue to drive the company. Vodafone Idea’s management has already underlined that the government will neither take a seat on the company’s board, nor will it take decisions regarding the company’s operations. <cmsannotation type="cmsannotation" annotationid="Capital infusion key to Vodafone Idea’s future" comment="subhead" text="Capital infusion key to Vodafone Idea’s future">Capital infusion key to Vodafone Idea’s future</cmsannotation> Capital infusion remains a key to Vodafone Idea’s future, according to analysts. The telco has been struggling to retain subscribers while its rivals <keyword id="6354504" type="General" weightage="50" keywordseo="reliance-jio" source="Orion">Reliance Jio</keyword> and Bharti Airtel have seen both their subscriber numbers as well as the average revenue per user (ARPU) climb up each quarter since FY22. In the company’s post-result investor call in Q2, Vodafone Idea’s chief executive officer Akshaya Moondra had said, ‘’We are trying to close the funding quickly so that some of the backlog of vendor payments that we have can be addressed.” Vodafone Idea needs funds not just to fund its capital expenditure requirements, but also to service its debt. According to a Motilal Oswal report, its current earnings before interest, taxes, depreciation and amortization (EBITDA) of ₹8,700 crore in FY23 is inadequate to service debt. Capex is another piece of puzzle that the telco needs to solve. Vodafone Idea is yet to roll out its 5G offerings even as Jio and Airtel 5G services have been available in several parts of the country since October 2022. “The much-awaited capital raise remains critical to provide immediate liquidity and invest in the rollout of 5G and extending 4G infrastructure. Vodafone Idea acquired 5G spectrum in the 3300Mhz and 26GHz bands in the recent auction (September 2022) but unlike Reliance Jio and Bharti Airtel, it has not deployed the spectrum and remains significantly behind in 4G network rollout too,” said the Motilal Oswal report. It remains to be seen if the equity conversion gives investors enough confidence about the future of Vodafone Idea, and whether it will be enough for them to infuse funds that the telco needs desperately. <div type="javascript" title="Custom" contenttype="Text"><cdata><![CDATA[]]></cdata></div> SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/adani-stocks-59844-crore-market-capitalisation-wiped-out-today-in-morning-trading/articleshow/97638076.cms">Adani group stocks continue to plummet – lose ₹59,844 crore in market capitalisation on Monday</a> <a href="https://www.businessinsider.in/business/corporates/news/adanis-stock-rout-can-impact-its-ability-to-raise-capital-or-refinance-debt-says-moodys/articleshow/97582403.cms">Adani’s stock rout can impact its ability to raise capital or refinance debt, says Moody’s</a> <a href="https://www.businessinsider.in/budget/news/budget-for-the-amrit-kaal-powered-by-capex-rooted-in-fiscal-consolidation/articleshow/97551916.cms">Budget for the Amrit Kaal: Powered by capex, rooted in fiscal consolidation</a>

Vodafone Idea shares hit 25% upper circuit after govt agrees to convert ₹16,133 cr dues into equity

British telecom major <keyword id="15492" type="General" weightage="100" keywordseo="vodafone" source="Orion">Vodafone</keyword> has raised its stake in debt-ridden <keyword id="6584552" type="General" weightage="50" keywordseo="vodafone-idea-limited" source="Orion">Vodafone Idea Limited</keyword> to 47.61 per cent through its subsidiary Prime Metals, a regulatory filing said on Monday. The company earlier held 44.39 per cent stake in <keyword id="1553175" type="General" weightage="80" keywordseo="vodafone-idea" source="Orion">Vodafone Idea</keyword> Limited (VIL). "Prime Metals held 2,18,55,26,081 equity shares, representing 7.61 per cent of the equity share capital, of Vodafone Idea Limited (the "company"). <keyword id="42733" type="General" weightage="50" keywordseo="pml" source="Orion">PML</keyword> has acquired 570,958,646 equity shares of the company through allotment of equity shares pursuant to a preferential issue of the company," the filing said. On Thursday, Vodafone Idea had said that its board has approved the allotment of 338.3 crore equity shares at Rs 13.30 per scrip to three promoter group entities - <keyword id="777130" type="General" weightage="50" keywordseo="euro-pacific-securities" source="Orion">Euro Pacific Securities</keyword>, Prime Metals and <keyword id="13300460" type="General" weightage="50" keywordseo="oriana-investments" source="Orion">Oriana Investments</keyword> - for about Rs 4,500 crore. This includes allotment of 1,96,66,35,338 equity shares to Euro Pacific Securities (promoter), 57,09,58,646 equity shares to Prime Metals (promoter), and 84,58,64,661 equity shares to Oriana Investments (promoter group). The telecom operator in March had announced a Rs 14,500-crore fundraising plan, where promoters would inject Rs 4,500 crore. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/apps/news/tatas-super-app-neu-is-all-set-to-launch-this-week/articleshow/90638405.cms">Tata’s super app ‘Neu’ is all set to launch this week</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/oneplus-nord-buds-expected-to-launch-soon-fcc-listing-reveals-design-and-battery-capacity/articleshow/90638554.cms">OnePlus Nord Buds expected to launch soon — FCC listing reveals design and battery capacity</a>

Vodafone raises stake to 47.61% in Vodafone Idea through subsidiary Prime Metals

<ul><li>Airtel has six times more cash than <keyword id="15492" type="CITY" weightage="20" keywordseo="Vodafone">Vodafone</keyword> Idea.</li><li>Both Reliance Jio and Airtel have nearly 1.5 times more subscribers than Vodafone Idea</li><li>Vodafone Idea has more spectrum compared to Jio but still gets the least amount of traffic.</li><li>The only thing it has more than others is debt. At the end of March, 2021, Vodafone Idea’s debt stood at ₹1.75 lakh crore, while Airtel’s debt stood at ₹1.53 lakh crore.</li></ul>Vodafone Idea’s situation continues to worsen, in terms of market share, revenue as well as the value of the company. On the other hand, its rivals, Bharti Airtel and Reliance Jio (owned by the country’s richest man Mukesh Ambani) continue to get stronger, often at the cost of Vodafone Idea. People are questioning the possibility of its survival. Even if it does get bailed out one way or another, the company will have a lot of catching up to do with its larger peers like Sunil Mittal’s Airtel and Ambani’s Reliance Jio. The loss of competitive muscle will only get worse the longer it remains in the current limbo. No wonder <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-news-birla-offers-to-give-up-his-27-stake-in-vodafone-idea/articleshow/84969189.cms">its Indian promoter Kumar Mangalam Birla</a> wants to give up his stake in the company, and his British partner Vodafone is not willing to sink any more money into this joint venture in India. Birla has also resigned as the non-executive director and chairman of the board of Vodafone Idea, a request which has been accepted by the company. Not surprisingly, the stock took a tumble. <div type="image" title="Vodafone Idea share price" msid="85035864" hostid="261" caption="&amp;lt;p&amp;gt;Vodafone Idea share price&amp;lt;/p&amp;gt;"></div> <cmsannotation type="cmsannotation" annotationid="Airtel has six times more cash than Vodafone Idea" comment="subhead" text="Airtel has six times more cash than Vodafone Idea">Airtel has six times more cash than Vodafone Idea</cmsannotation> As of March 31, 2021, Vodafone Idea had ₹2,216 crore in the form of cash and bank balances. This is six times lower than Airtel’s reported cash and bank balance in the same period. <cmsannotation type="cmsannotation" annotationid="The only thing that Vodafone has more of, than Airtel and Jio, is debt" comment="subhead" text="The only thing that Vodafone has more of, than Airtel and Jio, is debt">The only thing that Vodafone has more of, than Airtel and Jio, is debt</cmsannotation> The cash crunch will only get worse when it has to pay up the dues <a href="https://www.businessinsider.in/business/telecom/news/its-the-day-airtel-and-vodafone-idea-have-been-waiting-for-heres-the-agr-case-timeline-of-26-years/articleshow/77845908.cms">ordered by the Supreme court</a>, amounting to ₹58,631 crore. Of this, ₹5,034 crore falls due in December 2021 – an amount that the telco doesn’t seem to be in a position to pay. In comparison, Airtel’s balance AGR liability stands at ₹25,976 crore, which means its current liability comes to ₹2,598 crore. <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Company </td><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Total AGR demand (in crore) </td><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">AGR dues paid (in crore) </td><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Balance (in crore) </td></tr><tr><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Vodafone Idea </td><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹58,254 </td><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹7,854 </td><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹50,339 </td></tr><tr><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Airtel </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹43,980 </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹18,004 </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹25,976 </td></tr></tbody><tbody></tbody><tbody></tbody></table> At the end of March, 2021, Vodafone Idea’s debt stood at ₹1.75 lakh crore, while Airtel’s debt stood at ₹1.53 lakh crore. <cmsannotation type="cmsannotation" annotationid="Vodafone is losing both subscribers and revenue at a fast pace" comment="subhead" text="Vodafone is losing both subscribers and revenue at a fast pace">Vodafone is losing both subscribers and revenue at a fast pace</cmsannotation> <div type="image" title="Vodafone Idea, Airtel, Reliance Jio subscribers May 2021." msid="85035881" hostid="261" caption="&amp;lt;p&amp;gt;Vodafone Idea, Airtel and Reliance Jio subscribers.&amp;lt;/p&amp;gt;"></div> Since the beginning of 2020, Vodafone Idea has lost over 51 million subscribers. In the same period, Airtel and Reliance Jio have gained over 21 million and 62 million subscribers, respectively. To make matters worse, Vodafone is losing the relatively lucrative 4G subscribers, too – in May, for each 2G/3G subscriber it lost, three 4G subscribers ported out from the operator. <div type="image" title="Vodafone Idea, Airtel, Reliance Jio ARPU March, 2021." msid="85035904" hostid="261" caption="&amp;lt;p&amp;gt;Vodafone Idea, Airtel and Reliance Jio ARPU as of March, 2021.&amp;lt;/p&amp;gt;"></div> The average revenue that Vodafone Idea makes from each of its users is also under pressure. According to the company’s latest statements, the average revenue per user stood at ₹107 at the end of March, 2021, down from ₹121 three months prior. For comparison, Airtel’s ARPU in the same period was ₹145, while Jio stood at ₹138. The problem with lesser ARPU has become a vicious cycle in the case of Vodafone Idea. If it raises tariffs to improve its earnings, and others don’t, the company will lose more subscribers. If others follow VI in raising tariffs, they make more money, which can be later used to edge it out. The longer VI waits for others to make the first move, the more money it bleeds. <cmsannotation type="cmsannotation" annotationid="Vodafone has more spectrum compared to Jio but still gets the least amount of traffic" comment="subhead" text="Vodafone has more spectrum compared to Jio but still gets the least amount of traffic">Vodafone has more spectrum compared to Jio but still gets the least amount of traffic</cmsannotation> According to data from a UBS report dated July 29, here’s how much spectrum all the three telecom operators held at the end of March, 2021: <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Company </td><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Spectrum holding </td></tr><tr><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Airtel </td><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">2,112 MHz </td></tr><tr><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Vodafone Idea </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">1,768 MHz </td></tr><tr><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Reliance Jio </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">1,752 MHz </td></tr></tbody><tbody></tbody></table> Source: UBS, as of March, 2021 Despite holding the second largest chunk of spectrum, Vodafone Idea’s inability to upgrade its users to 4G has hampered its potential – both in terms of the number of 4G subscribers as well as the amount of data it serves. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Company </td><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">4G subscribers (in million) </td><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Total data (in million GB) </td></tr><tr><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Reliance Jio </td><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">426.6 </td><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">16,700 </td></tr><tr><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Airtel </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">179.3 </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">9,207 </td></tr><tr><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Vodafone Idea </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">113.9 </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">4,856 </td></tr></tbody></table> Source: UBS, as of March, 2021 <cmsannotation type="cmsannotation" annotationid="The odds are stacked against Vodafone Idea" comment="subhead" text="The odds are stacked against Vodafone Idea">The odds are stacked against Vodafone Idea</cmsannotation> In a report dated July 29, Goldman Sachs maintained its ‘Sell’ rating for Vodafone Idea, with the target price set at ₹3 per share, suggesting that there is a further likelihood of a 60% decline in the telco’s share price. “It is well-flagged that Vodafone Idea has large repayments due starting Dec ‘21, and its balance sheet is stressed,” the report adds. “If Vodafone Idea is unable to repair its balance sheet quickly, we see an accelerated erosion in the company’s market share,” the report explains. On the other hand, analysts are bullish on Airtel. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Brokerage </td><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Target price </td><td style="border-width: 0.5pt 0.5pt 1pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Upside </td></tr><tr><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">JP Morgan </td><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹790 </td><td style="border-width: 1pt 0.5pt 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">38% </td></tr><tr><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Credit Suisse </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹750 </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">31% </td></tr><tr><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">CLSA </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹730 </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; background-color: rgb(217, 217, 217); padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">27% </td></tr><tr><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">Goldman Sachs </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">₹675 </td><td style="border-width: 0.5pt; border-style: solid; border-color: rgb(0, 0, 0); vertical-align: bottom; padding: 0pt 5.75pt; overflow: hidden; overflow-wrap: break-word;">17% </td></tr></tbody></table> Note: Upside compared to Airtel’s share price of ₹574, on August 4, 2021 SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/as-vodafone-idea-shares-dive-10-and-more-heres-a-look-at-what-analysts-had-to-say-about-it-prospect-in-recent-weeks/articleshow/84999673.cms">As Vodafone Idea shares dive 10% and more, here's a look at what analysts had to say about it prospect in recent weeks</a> <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-and-airtel-shares-fall-as-sc-rejects-agr-dues-re-computation-appeal/articleshow/84668288.cms">Vodafone Idea sinks nearly 10% and Airtel tumbles a bit after India’s Supreme Court denies a discount on past dues</a> <a href="https://www.businessinsider.in/business/telecom/news/its-the-day-airtel-and-vodafone-idea-have-been-waiting-for-heres-the-agr-case-timeline-of-26-years/articleshow/77845908.cms">Airtel and Vodafone Idea get 10 years to repay AGR dues – here’s a timeline of the case</a>

The enormous gap between Vodafone Idea on one hand, Airtel and Jio on the other

<ul><li>The Indian billionaire with a 27% stake in the telecom operator has reportedly written to the government. </li><li>In a letter to the government, <keyword id="39439" type="COMPANY" weightage="20" keywordseo="birla">Birla</keyword> said potential investors want to see ‘clear government intent’ to have a three-player telecom market. </li><li><keyword id="1553175" type="COMPANY" weightage="20" keywordseo="Vodafone-Idea">Vodafone Idea</keyword>’s current market capitalisation stands at ₹24,000 crore, which means Birla’s 27% stake is worth ₹6,500 crore. </li></ul><keyword id="6354955" type="UNKNOWN" weightage="20" keywordseo="Kumar-Mangalam-Birla">Kumar Mangalam Birla</keyword>, one of the promoters of the beleaguered telco Vodafone Idea, has offered to give up his 27% stake in the company to help it stay afloat. Post the merger of Vodafone and Idea, Birla owns a 27% stake in the telco, while Vodafone Plc., owns a 44% stake. At the current market capitalisation of around ₹24,000 crore, Birla’s stake is worth ₹6,500 crore. The shares of Vodafone Idea had gained a little over a percent at 1:50 p.m on August 2 (Monday). The stock has lost over a quarter of its value since the start of the year. <div type="image" title="Vodafone Idea 01_07_21 to 02_08_21." msid="84969304" hostid="261" caption="&amp;lt;p&amp;gt;Vodafone Idea share price over the last one month&amp;lt;/p&amp;gt;"></div> In a letter to the Union Cabinet Secretary, Rajiv Gauba, Birla reportedly <a href="https://economictimes.indiatimes.com/industry/telecom/telecom-news/kumar-mangalam-birla-willing-to-give-up-stake-in-voda-idea-for-telcos-survival/articleshow/84968401.cms">said</a> he is willing to give up his stake in Vodafone Idea to any state-owned or a domestic financial entity, provided the entity wants to continue operations of Vodafone Idea as a going concern. “It is with a sense of duty towards 27 crore Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity-public sector/government/domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” Birla said in his letter. Going concern refers to a business that has the assets to meet financial obligations when they fall due. Vodafone Idea is currently saddled with a debt of ₹1.8 lakh crore, a third of which is due to deferred spectrum license fee, and levy on recalculated revenue from the past to include income from non-telecom operations. Earlier last month, the <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-and-airtel-shares-fall-as-sc-rejects-agr-dues-re-computation-appeal/articleshow/84668288.cms">Supreme Court refused</a> to give the telco a discount on its retrospective dues, which amount to over ₹50,000 crore. This, combined with deferred spectrum dues of ₹8,292 crore means the company needs funds right now – even though <a href="https://www.businessinsider.in/stock-market/markets/news/cost-cutting-is-not-helping-vodafone-idea-fresh-funds-might-but-nothing-is-coming/articleshow/84092610.cms">nothing seems to be coming</a>. Back in September 2020, Vodafone Idea’s board had <a href="https://economictimes.indiatimes.com/markets/stocks/news/voda-ideas-rs-25000-cr-fund-raise-set-to-be-done-in-2-3-months/articleshow/78964068.cms?from=mdr">announced</a> plans to raise up to ₹25,000 crore through debt and equity. Nearly a year later, the plans are yet to yield any results. The lack of government support seems to be keeping investors at bay, which is something that Birla touched upon in his letter. “To actively participate in the fund raising, the potential foreign investors want to see clear government intent to have a three-player telecom market (consistent with its public stance) through positive actions on long-standing requests such as clarity on AGR liability, adequate moratorium on spectrum payments and most importantly, a floor pricing regime above the cost of service,” he said. “In the absence of definitive steps in this regard, the potential investors have understandable hesitation to invest,” he added further. The government is also considering, according to reports, a slew of long-term measures to help the telecom sector. It may be willing to rewrite the rules to exclude ‘non-telecom’ revenue from the licence agreements, and allow telcos to surrender unused spectrum for a small penalty. However, it will not affect Vodafone Idea’s present dues and the current financial health. The last word on the issue is yet to be spoken. SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-and-airtel-shares-fall-as-sc-rejects-agr-dues-re-computation-appeal/articleshow/84668288.cms">Vodafone Idea sinks nearly 10% and Airtel tumbles a bit after India’s Supreme Court denies a discount on past dues</a> <a href="https://www.businessinsider.in/stock-market/markets/news/cost-cutting-is-not-helping-vodafone-idea-fresh-funds-might-but-nothing-is-coming/articleshow/84092610.cms">Cost cutting is not helping Vodafone Idea, fresh funds might ⁠— but ‘nothing is coming’</a> <a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-adds-nine-times-more-subscribers-than-airtel-in-april-2021/articleshow/84367596.cms">Reliance Jio picks up serious pace, adds nine times more subscribers than Airtel in April – Vodafone Idea continues its downward spiral</a>

Birla is reportedly ready to give Vodafone Idea to the Indian government

What if Vodafone Idea dies and can it be saved?

<ul><li><keyword id="1553175" type="General" weightage="100" keywordseo="vodafone-idea" source="Orion">Vodafone Idea</keyword>’s board of directors is scheduled to meet on October 21 to consider raising funds. </li><li>The meeting comes at a crucial time, when <keyword id="6375231" type="General" weightage="50" keywordseo="indus-towers" source="Orion">Indus Towers</keyword>, one of the main tower providers of Vodafone Idea, has demanded the telco pay up its dues. </li><li>Shares of the telco gained after the fundraising announcement. </li></ul>Vodafone Idea’s board of directors will meet on October 21 to consider fundraising via convertible debentures, the telco said in an exchange filing, without divulging details about the quantum of the fund raise. "We wish to inform you that a meeting of the board of directors of the company is scheduled to be held on October 21, 2022, inter-alia, to consider and evaluate a proposal for issuance of debenture securities convertible into equity shares on a preferential/private placement basis to a vendor," Vodafone Idea said in its exchange filing. Convertible debenture is a long-term debt that can be converted into equity shares after a specified period. Vodafone Idea’s latest attempt to raise funds is for investing in its network and also to pay its dues to its service providers, including Indus Towers – a tower company in which rival telco Bharti <keyword id="15491" type="General" weightage="50" keywordseo="airtel" source="Orion">Airtel</keyword> holds a 47.76% stake. Notably, Vodafone Idea’s parent company, <keyword id="105732" type="General" weightage="50" keywordseo="vodafone-group-plc" source="Orion">Vodafone Group Plc</keyword>, also holds a 21.05% stake in Indus Towers. Vodafone Idea<a href="https://economictimes.indiatimes.com/industry/telecom/clear-dues-or-lose-tower-access-indus-towers-to-vodafone-idea/articleshow/94492219.cms"> reportedly</a> owes over ₹7,000 crore to Indus Towers. The tower company has asked the telco to clear dues or risk losing access to towers from November. Reacting to the news, Vodafone Idea’s shares rose 1% to ₹8.55. This is, however, still below the ₹10 level that the government is reportedly waiting for before converting its debt to equity, as part of the <a href="https://www.businessinsider.in/business/telecom/news/telecom-relief-package-airtel-vodafone-idea-get-four-year-moratorium-on-agr-dues/articleshow/86227218.cms">telecom relief package announced in 2021</a>. The package gave telcos an option to go for a four-year moratorium on their adjusted gross revenue (AGR) and spectrum dues, among other things. <cmsannotation type="cmsannotation" annotationid="The tide that won’t stem" comment="subhead" text="The tide that won’t stem">The tide that won’t stem</cmsannotation> In 2022 so far, Vodafone Idea has lost over 12 million subscribers, according to data from telecom regulator TRAI. Its rivals <keyword id="6354504" type="General" weightage="50" keywordseo="reliance-jio" source="Orion">Reliance Jio</keyword> and Airtel continue to add subscribers at a rapid pace. <div type="image" title="Airtel Reliance Jio Vodafone Idea subscriber additions Jan-Aug 2022." msid="94963881" hostid="261" sizebytes="23682" caption="&amp;lt;p&amp;gt;Telecom subscriber trends in 2022 so far&amp;lt;/p&amp;gt;"></div> While the telecom sector is<a href="https://www.businessinsider.in/business/telecom/news/telecom-sector-to-ring-in-stability-in-q2-jio-and-airtel-expected-to-grow-stronger-vi-weaker/articleshow/94709309.cms"> expected</a> to ring in stability in Q2, analysts suggest Vodafone Idea will continue to grow weaker. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/maggi-maker-nestl-indias-net-profit-grows-8-3-to-668-crore-in-q2/articleshow/94960866.cms">Maggi maker Nestlé India’s net profit grows 8.3% to ₹668 crore in Q2</a> <a href="https://www.businessinsider.in/business/corporates/news/moonlighting-is-fine-as-long-as-it-is-unrelated-to-what-we-do-for-our-clients-says-lt-tech/articleshow/94958101.cms">Moonlighting is fine as long as it is unrelated to what we do for our clients, says L&amp;T Tech</a> <a href="https://www.businessinsider.in/business/news/jaypee-and-amrapali-groups-collapse-leaving-buyers-in-the-lurch/articleshow/94961447.cms">70,000 housing units in trouble after Jaypee and Amrapali groups head into financial trouble</a>

Vodafone Idea board to meet on October 21 to consider fundraising via convertible debentures

<ul><li>Reliance <keyword id="2003276" type="General" weightage="80" keywordseo="jio" source="Orion">Jio</keyword> and Bharti <keyword id="15491" type="General" weightage="80" keywordseo="airtel" source="Orion">Airtel</keyword> are waiting it out and getting their users hooked onto 5G before hiking tariffs. </li><li>Elevated subscriber churn has also acted as a barrier against <keyword id="891186" type="General" weightage="20" keywordseo="tariff-hikes" source="Orion">tariff hikes</keyword>, according to analysts. </li><li>Enhancing 5G utilization also lets Jio and Airtel grab market share from <keyword id="1553175" type="General" weightage="80" keywordseo="vodafone-idea" source="Orion">Vodafone Idea</keyword>, which is yet to launch its 5G services. </li></ul>There is a broad consensus amongst both telecom companies’ management and analysts that the sector needs another round of tariff hikes, but <keyword id="6383126" type="General" weightage="100" keywordseo="telcos" source="Orion">telcos</keyword> seem shy of blinking first this time around amidst a rise in subscriber churn. While analysts have noted multiple times that tariff hikes are imminent, telecom companies are yet to bite the bullet. Bharti Airtel, the second largest telco, had said in Q2 that there is a<a href="https://www.businessinsider.in/business/telecom/news/bharti-airtel-reports-89-yoy-increase-in-q2-net-profit-to-2145-crore/articleshow/95207348.cms"> “need for tariff correction”</a>, while Vodafone Idea said during its Q1 investor call that a<a href="https://www.businessinsider.in/business/telecom/news/vi-betting-on-tariff-hike-as-it-lost-over-10-million-every-day-in-q1-fy23/articleshow/93348828.cms"> tariff hike is necessary</a> before the end of 2022. Curiously enough, neither telco touched upon tariff hikes in their respective Q3 earnings. Global brokerage Jefferies had noted that it expects Bharti Airtel and Reliance Jio to hike tariffs by 10% each in Q4 of FY23, FY24 and FY25. So far, however, tariff hikes have not materialized and telcos don’t seem to be in any major rush going by the lack of commentary in this regard in their latest earning calls. <cmsannotation type="cmsannotation" annotationid="Telcos want to get users hooked onto 5G" comment="subhead" text="Telcos want to get users hooked onto 5G">Telcos want to get users hooked onto 5G</cmsannotation> The high cost associated with the acquisition of 5G spectrum and the rollout of 5G services means that tariff hikes remain a key trigger for telecom companies. However, for now, Airtel and Jio are focusing on expanding the availability of their 5G networks and getting users hooked onto the higher data speeds before hiking tariffs. According to the analysts Jefferies, Jio and Airtel are also grabbing market share at the expense of Vodafone Idea, which is struggling to roll out its 5G services due to a fund crunch. “We believe there is greater uncertainty on tariff hikes in the near term given that large capacity creation with 5G will shift focus on boosting utilization. Moreover, focus on market share will rise amidst moderating data subscriber growth and Vodafone Idea’s worsening situation,” said a Jefferies report. <div type="image" title="Telecom market share April-Dec 2Jan-22_31.13_35.49_23.15 Feb-22_31.37_35.28_23.09 Mar-22_31.55_35.37_22.83 Apr-22_31.61_35.5_22.68 May-22_31.62_35.69_22.56 Jun-22_31.63_36_22.37 Jul-22_31.66_36.23_22.22 Aug-22_31.." msid="98123501" hostid="261" sizebytes="30376" caption="&amp;lt;p&amp;gt;Telecom market share FY23&amp;lt;/p&amp;gt;"></div> Telcos are also wary of the elevated subscriber churn, and a tariff hike at this point could worsen it. “We are not baking in any tariff hikes at all in the calendar year 2023. We believe it will be difficult for operators to do another 20% hike, as subscribers found it difficult to absorb the last 20% hikes, leading to heightened churn,” JP Morgan said in a note. However, analysts at Jefferies were relatively less bearish on the prospect of tariff hikes, saying that we could see one round of hikes by March 2023. Going forward, the brokerage believes that telcos could resort to hiking 4G tariffs and driving up usage of 5G services by offering larger data bundles at a lower cost per GB. “While 5G is unlikely to drive up ARPUs without tariff hikes, it will help Bharti Airtel and Reliance Jio gain market share from Vodafone Idea," JP Morgan added. For context, Reliance Jio’s 5G services are available in 277 cities across the country, while Airtel’s 5G services are available in 133 cities. Vodafone Idea, on the other hand, is yet to officially roll out its 5G services. Going forward, the direction telcos choose in monetising 5G will be key in determining the timing and quantum of tariff hikes. <cmsannotation type="cmsannotation" annotationid="Lack of tariff hikes results in marginal uptick in ARPU" comment="subhead" text="Lack of tariff hikes results in marginal uptick in ARPU">Lack of tariff hikes results in marginal uptick in ARPU</cmsannotation> The lack of tariff hikes has also resulted in only a marginal uptick in the average revenue per user (ARPU) of the three telcos. While Jio’s ARPU <a href="https://www.businessinsider.in/business/telecom/news/reliance-jios-net-profit-up-3-2-sequentially-at-4881-crore-in-q3-on-better-subscriber-mix/articleshow/97179677.cms">increased 1.8%</a> sequentially, Vodafone Idea <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-q3-net-loss-widens-to-7990-crore-average-revenue-per-user-edges-up-to-135/articleshow/97939836.cms">reported</a> a 3% increase. Airtel, on the other hand, <a href="https://www.businessinsider.in/business/telecom/news/bharti-airtel-q3-net-profit-jumps-91-to-1588-crore-misses-estimates/articleshow/97698481.cms">reported</a> a 1.6% increase due to premiumisation. The increase in 4G usage also helped Jio and Airtel post a moderate uptick in their revenue – while Jio’s revenue increased marginally by 2.4% sequentially in Q3, Airtel reported a 3.7% topline growth. According to the analysts at JM Financial, this revenue uptick was due to an increase in 4G subscribers – while Jio’s subscriber base grew by 4.55 million, Airtel reported an increase of 3.39 million during the December quarter. Vodafone Idea, on the other hand, reported a decline of 7.81 million subscribers during this period. However, the analysts at Jefferies believe that the government picking up a 33% stake in Vodafone Idea has improved the outlook for tariff hikes in the longer term. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/indian-banks-dream-run-could-soon-be-over-as-deposit-rates-start-catching-up-to-lending-rates/articleshow/98117219.cms">Indian banks’ dream run could soon be over as deposit rates start catching up to lending rates</a> <a href="https://www.businessinsider.in/tech/news/microsoft-bing-chatgpt-gives-death-threats-tries-to-break-a-marriage-and-more/articleshow/98091746.cms">Skynet, anyone? Microsoft’s Bing AI gives death threats, tries to break a marriage and more</a> <a href="https://www.businessinsider.in/stock-market/news/adani-group-stocks-meltdown-continues-on-monday/articleshow/98084715.cms">Adani group stocks meltdown continues on Monday – Adani Enterprises sees the biggest decline</a>

Wary of churn, telcos want to get users hooked onto 5G before hiking tariffs

<ul><li>Media reports suggest that the government is considering picking up a stake in Vodafone Idea.</li><li>This could be done by way of converting Vodafone Idea’s existing dues as equity.</li><li>Experts suggest that this could be a bad idea.</li></ul>Vodafone Idea continues to be in a phase of flux as the government drags its feet on announcing the much-awaited telecom relief package. But while the government draws a plan in this regard, there are reports that suggest it is considering picking up a stake in the company. According to a report by The <a href="https://telecom.economictimes.indiatimes.com/news/govt-considers-picking-up-token-stake-in-vodafone-idea/86219448">Economic Times</a> (ET), the Indian government could pick up a “token” stake in Vodafone Idea in a bid to encourage prospective investors from ploughing their money in the struggling telco. “A decision could be taken by the Cabinet on Wednesday, but there’s no certainty,” an unnamed person was quoted by ET. At the moment, media reports suggest that the government wants to offer a moratorium of four years on adjusted gross revenue (AGR) and spectrum dues as part of its telecom relief package. <div type="Article" hostid="261" msid="86196076" title="Yes Bank, SBI and others want Vodafone Idea to be saved, here’s why" mstype="2" mssubtype="0"></div> Now, the ET report states that the government could convert a part of its dues – currently standing at over ₹58,000 crore – into equity to breathe confidence in the company’s future and encourage other investors to infuse equity. The report further states that the government may consider picking up an additional stake after four years. <cmsannotation type="cmsannotation" annotationid="‘A remedy worse than the disease’" comment="subhead" text="‘A remedy worse than the disease’">‘A remedy worse than the disease’</cmsannotation> However, <a href="https://www.businessinsider.in/business/telecom/news/minimising-the-fallout-from-a-vodafone-idea-collapse-heres-what-lenders-and-experts-suggest/articleshow/85171047.cms">experts suggest</a> that the government buying a stake in Vodafone Idea may not be wise. <div type="Video" msid="85209717" hostid="261" title="What if Vodafone Idea dies and can it be saved?" thumbUrl="https://denmark.timesinternet.in/cmslite/api/app/images.jpg?msid=85209717"></div> “Converting Vodafone Idea into a government company, or merging it with a government company might probably be a remedy worse than the disease,” said R Chandrashekhar, former secretary of Telecom and Information Technology, in an <a href="https://www.businessinsider.in/business/telecom/news/what-if-vodafone-idea-dies/articleshow/85127937.cms">exclusive interview</a> with Business Insider. Sanjay Kapoor, former chief executive officer (CEO) of Bharti Airtel, alluded to culture clash. “Bringing together an Indian company, a global company culture and a public sector company’s culture together, and managing the fate of those 1 lakh public sector employees – who in the private sector has the wherewithal to do it?” asked Kapoor. It will be interesting to see whether a token stake will be enough to attract investors to invest in Vodafone Idea. As things stand right now, the company remains in a state of flux. SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/yes-bank-sbi-and-others-want-vodafone-idea-to-be-saved-heres-why/articleshow/86196076.cms">Yes Bank, SBI and others want Vodafone Idea to be saved, here’s why</a> <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-and-airtel-stocks-fall-amid-reports-that-government-hasnt-discussed-proposal-for-a-telecom-relief-package/articleshow/86033281.cms">Vodafone Idea falls after reports that government hasn’t discussed proposal for a telecom relief package</a> <a href="https://www.businessinsider.in/business/telecom/news/jiophone-next-is-the-new-weapon-in-ambanis-arsenal-as-he-takes-aim-at-the-500-million-subscriber-mark/articleshow/85974565.cms">JioPhone Next is the new weapon in Ambani’s arsenal as he takes aim at the 500 million subscriber mark</a>

Government picking up a stake in Vodafone Idea ‘might be a remedy worse than the disease’, say experts

<ul><li><keyword id="1553175" type="General" weightage="100" keywordseo="vodafone-idea" source="Orion">Vodafone Idea</keyword> could be close to clinching an investment of ₹20,000 crore – something that it has been looking for since 2020.</li><li>This probable fundraise comes less than two months after its promoter, Vodafone Plc. pumped in ₹4,500 crore via its equity arms.</li><li>Amazon, one of the reported investors, has been exploring an entry in the Indian telecom sector since 2020 by picking up a stake in Vodafone Idea.</li></ul>Shares of Vodafone Idea have been gaining for the last two days - which is a rare occurrence. In fact, its market cap swelled by ₹2,000 crore after news of its fundraising plans, especially from a well capitalized global player like Amazon have started doing the rounds. For nearly three years now, Vodafone Idea has been <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-will-raise-up-to-25000-crore-by-selling-shares-and-taking-loans/articleshow/77933604.cms">trying to raise ₹25,000 crore</a> to tide over its AGR troubles as well as make network and spectrum investments into a market which now shows signs of optimism with low competitive intensity. As per media reports, it might be close to clinching a deal with global tech major Amazon, to raise as much as ₹20,000 crore. <div type="image" title="Vodafone Idea 01_01_22 to 31_05_22." msid="91906362" hostid="261" caption="&amp;lt;p&amp;gt;Vodafone Idea share price in 2022&amp;lt;/p&amp;gt;"></div> According to a report by the <a href="https://economictimes.indiatimes.com/industry/telecom/telecom-news/close-to-tying-up-rs-20000-crore-to-fight-rivals-vodafone-idea-md-ravinder-takkar/articleshow/91731538.cms">Economic Times</a>, Vodafone Idea is expected to raise ₹10,000 crore via an equity stake sale, and ₹10,000 crore via debt. The latter would send its total debt over ₹2 lakh crore, but the company’s managing director Ravinder Takkar is not flinching, saying that the government owns nearly 90% of this debt. Earlier, the Takkar-led telco had said it <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-will-raise-up-to-25000-crore-by-selling-shares-and-taking-loans/articleshow/77933604.cms">needs ₹25,000 crore</a> to turn around its fortunes and remain competitive – of this, it has already <a href="https://www.businessinsider.in/business/news/vodafone-raises-stake-to-47-61-in-vodafone-idea-through-subsidiary-prime-metals/articleshow/90639253.cms#:~:text=Vodafone%20raises%20stake%20to%2047.61%25%20in%20Vodafone%20Idea%20through%20subsidiary%20Prime%20Metals,-Advertisement&amp;text=British%20telecom%20major%20Vodafone%20has,regulatory%20filing%20said%20on%20Monday.">raised ₹4,500 crore</a> in April. If they raise the said amount too, then their war chest will be almost full – and bring it back into the market with full force. <cmsannotation type="cmsannotation" annotationid="Vodafone Idea continues to lose millions of subscribers every month" comment="subhead" text="Vodafone Idea continues to lose millions of subscribers every month">Vodafone Idea continues to lose millions of subscribers every month</cmsannotation> Vodafone Idea’s bid to turn around its business and stabilize its operations will take a lot of work. It has been losing millions of subscribers every month. In the first three months of 2022, it lost 4.7 million subscribers. Throughout the fiscal year 2021-22, the telco lost nearly 23 million subscribers – an average of 1.9 million subscriber loss every month. <div type="image" title="Airtel Jio Vodafone Idea subscriber chart 2021-22." msid="91906564" hostid="261" caption="&amp;lt;p&amp;gt;Net subscriber additions in 2021-22&amp;lt;/p&amp;gt;"></div> In the same period, its rival Airtel added 8 million subscribers, although Jio lost nearly 19 million subscribers, too. However, Jio’s losses are on account of the telco wiping its slate clean of subscribers who are inactive and not paying. While it’s not certain who the investor is, a report by The Ken suggests it could be Amazon. The e-commerce giant has so far been left behind by its rivals Google, Facebook and Microsoft, who have all either partnered with Airtel and Reliance Jio, or have invested billions of dollars in these companies. <div type="javascript" title="Custom" contenttype=""><cdata><![CDATA[]]></cdata></div> Vodafone Idea, on the other hand, is yet to see a single dollar from them. Amazon was <a href="https://economictimes.indiatimes.com/industry/telecom/telecom-news/amazon-verizon-may-invest-over-4-billion-in-indias-vodafone-idea-report/articleshow/77904230.cms">said</a> to be exploring a joint investment of $4 billion with US carrier Verizon in Vodafone Idea back in 2020, but that did not pan out. SEE ALSO: <a href="https://www.businessinsider.in/thelife/personalities/news/gautam-adani-a-story-on-how-to-generate-wealth-via-hope-fomo-and-of-course-debt/articleshow/91829090.cms">Understanding Gautam Adani’s rise: a story on how to generate wealth via hope, equity and of course debt</a> <a href="https://www.businessinsider.in/stock-market/news/these-four-drone-company-stocks-gave-record-breaking-returns-in-one-year/articleshow/91892935.cms">These four drone company stocks gave record breaking returns in one year</a> <a href="https://www.businessinsider.in/cryptocurrency/news/indian-government-looking-for-ways-to-tax-nfts-as-per-a-new-report/articleshow/91882530.cms">After cryptos, the taxman could come for your NFTs says a new report</a>

Vodafone Idea will have a solid ‘turnaround’ war chest if it clinches the Amazon deal

<ul><li>Vodafone-Idea’s shares are up 5% after the company completed its stake sale in Indus Towers for ₹3,760 crore.</li><li>There are also reports that a consortium led by Oaktree Capital has offered around $2 billion of capital to invest in the Vodafone Group’s Indian arm. </li><li>Analysts believe that fresh investments and price hikes to improve average return per users (ARPU) are the only things that can help its survival.</li></ul>Vodafone-Idea has been bleeding subscribers for years and now even its postpaid customers are under threat of being wooed away by <keyword id="6354504" type="DEFINITION" weightage="20" keywordseo="reliance-jio">Reliance Jio</keyword>. According to analysts, the only way out for the company is with the fresh infusion of funds — and that’s what the company is doing. Vodafone-Idea shares were up nearly 5% today morning after the telecom player completed the sale of its stake in Indus Towers for ₹3,760.1 crore in cash. There are also <a href="https://www.bloombergquint.com/business/oaktree-varde-said-to-offer-2-billion-funding-to-vodafone-idea">reports</a> that a consortium backed by Oaktree Capital has offered Vodafone’s Indian arm $2 billion — approximately ₹14,800 crore — in funding. <div type="image" title="Copy of sbi share price (1)" msid="79316655" hostid="261" caption="&amp;lt;p&amp;gt;Vodafone-Idea share price since September 7 when it was rebranded as Vi!&amp;lt;/p&amp;gt;"></div> Both of these moves tie in with <keyword id="1553175" type="COMPANY" weightage="20" keywordseo="Vodafone-Idea">Vodafone Idea</keyword>’s announcement in September where it revealed its plans to raise ₹25,000 crore by selling its shares and debt. New funds and price hikes are the only way to save Vodafone-Idea As Vodafone Idea continues to lose subscribers, it's also running out of money. This limits the company’s ability to invest in networks and adds to subscribers’ woes who switch over to other telecom operators. “We believe this spiral can be broken only with significant ARPU increase and fund infusion,” said Edelweiss Research in its report dated October 30. According to Axis Capital, Vodafone Idea’s future depends on it. The new mega tower company In the endeavour to raise new funds, Vodafone Idea has sold off around 11.15% of its holding in Indus Towers to make way for a newly merged mega tower company. The Vodafone Group will still hold around 28.12% in the new firm. Meanwhile, <keyword id="6354287" type="UNKNOWN" weightage="20" keywordseo="bharti-airtel">Bharti Airtel</keyword>’s stake reduces from 53.51% in Bharti Infratel to 36.7% in the combined entity. "Merger of Indus Towers Limited &amp; Bharti Infratel Limited has been completed today. The combined entity, to be renamed as Indus Towers Limited, is listed on the National Stock Exchange of India Limited &amp; BSE Limited," said Bharti Airtel in its filing with the Indian exchanges. Oaktree, Varde Partners and others offer $2 billion in funding The Oaktree-led consortium is formed of many companies, including Varde Partners. Sources told <a href="https://www.bloombergquint.com/business/oaktree-varde-said-to-offer-2-billion-funding-to-vodafone-idea">Bloomberg</a> that they have made an offer to infuse between $2 billion to $2.5 billion of capital into Vodafone Idea. But, this is only one of the many offers that the company is currently considering. Vodafone Idea is in talks with several other investors. The company has been reporting losses for nine consecutive quarters. And, since the merger of 2017, Vodafone Idea is yet to come up green in its annual reports. Vodafone Idea is the weakest of three telecom giants in India, the other two being Bharti Airtel and Reliance Jio. And its survival is the only thing that’s standing in the way of the Indian telecom market turning into a duopoly. SEE ALSO: <a href="https://www.businessinsider.in/tech/apps/news/pubg-mobile-india-was-supposed-to-launch-today/articleshow/79315462.cms">PUBG Mobile India was rumoured to launch today — but there is no official update from the company</a> <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-ril-infosys-vodafone-idea-apollo-hospitals-emami-route-mobile-syngene-and-others/articleshow/79314343.cms">Top stocks to watch — RIL, Infosys, Vodafone-Idea, Apollo Hospitals, Emami, Route Mobile, Syngene, and others</a> <a href="https://www.businessinsider.in/finance/banks/news/lakshmi-vilas-bank-is-the-fifth-financial-firm-after-ilfs-dhfl-yes-bank-and-pmc-bank-to-collapse-in-india/slidelist/79286096.cms">Lakshmi Vilas Bank is the fifth financial firm to collapse in India within the last 30 months</a>

Vodafone Idea soars nearly 5% on fund infusion from Indus Towers stake sale

<ul><li><keyword id="1553175" type="General" weightage="100" keywordseo="vodafone-idea" source="Orion">Vodafone Idea</keyword> can heave a sigh of relief after finally succeeding in raising funds.</li><li>The telco has raised ₹4,500 crore from its promoters, and has an option to raise an additional ₹10,000 crore later.</li><li>This comes after the Vodafone Group sold a 7.1% stake in Indus Towers, raising over ₹4,300 crore in the process.</li></ul>Vodafone Idea has finally kickstarted its long-awaited fundraising plan, with the company’s promoters – Vodafone Group Plc., and Aditya Birla Group, pitching in with ₹4,500 crore. Interestingly enough, Vodafone Group had earlier <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-could-finally-get-the-much-needed-capital-infusion-from-its-british-parent-vodafone-group-plc/articleshow/89774140.cms">refused to infuse funds</a> in the telco for several months. Ahead of the fundraising announcement on March 3, the company’s shares ended the day up by over 6%. This should provide some respite to the company’s investors, who have seen their investment erode by a third since the beginning of 2022. However, Vodafone Idea’s shares were down by 3.6% as of 9:40 a.m., today, March 4, as the Russia-Ukraine conflict continues to worsen. <div type="image" title="Vodafone Idea 01_01_22 to 04_03_22." msid="89983726" hostid="261" caption="&amp;lt;p&amp;gt;Vodafone Idea share price in 2022&amp;lt;/p&amp;gt;"></div> The company’s board has room to raise an additional ₹10,000 crore via equity and debt instruments, including depository receipts and foreign currency convertible bonds. This comes after the Vodafone Group <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-could-finally-get-the-much-needed-capital-infusion-from-its-british-parent-vodafone-group-plc/articleshow/89774140.cms">sold</a> a total of 7.1% stake in tower company Indus Towers – it raised ₹1,442 crore via a 2.4% stake sale via a block deal, and another ₹2,900 crore by selling the balance 4.7% stake to Bharti Airtel, a rival of Vodafone Idea. Out of the ₹4,500 crore, 75% of the funds will come in from the Vodafone Group, with the Aditya Birla Group contributing the remaining 25%. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[]]></cdata></div> <cmsannotation type="cmsannotation" annotationid="What does it mean for users?" comment="subhead" text="What does it mean for users?">What does it mean for users?</cmsannotation> The fundraise should help Vodafone Idea work towards its plans to raise capital expenditure to the tune of $2 billion (approx. ₹15,000 crore). This will primarily be aimed at boosting the telco’s network capacities, improving the technology backend and participating in the upcoming 5G spectrum auction, expected to happen sometime in the first quarter of 2022. <cmsannotation type="cmsannotation" annotationid="Fundraise comes soon after Vodafone Idea opted for AGR dues moratorium" comment="subhead" text="Fundraise comes soon after Vodafone Idea opted for AGR dues moratorium">Fundraise comes soon after Vodafone Idea opted for AGR dues moratorium</cmsannotation> The long-awaited fundraise comes soon after the ailing telecom operator opted for the Indian government’s adjusted gross revenue (AGR) dues moratorium, allowing it to obtain a much-needed cash flow relief. According to the AGR and spectrum dues case in the Supreme Court, the total demand stood at ₹58,254 crore of which Vodafone Idea has already repaid ₹7,854 crore. Its current outstanding is ₹50,339 crore. More recently, <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-reportedly-wants-the-government-to-release-15000-crore-bank-guarantees/articleshow/89937099.cms">the telco also applied</a> to the Department of Telecommunications (DoT) to release its bank guarantees worth ₹15,000 crore, and also freeze the calculation of interest on its AGR dues on the date of its application for moratorium. SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-reportedly-wants-the-government-to-release-15000-crore-bank-guarantees/articleshow/89937099.cms">Vodafone Idea reportedly wants the government to release ₹15,000 crore bank guarantees ahead of its fundraising plan</a> <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-could-finally-get-the-much-needed-capital-infusion-from-its-british-parent-vodafone-group-plc/articleshow/89774140.cms">Vodafone Idea’s British parent could infuse capital in the telco after refusing to do so for several months</a> <a href="https://www.businessinsider.in/business/telecom/news/mukesh-ambanis-reliance-jio-loses-13-million-subscribers-its-second-largest-fall-so-far/articleshow/89644193.cms">Reliance Jio gets its second big jolt on its path to 500 million subscribers</a>

Even a big fundraise is not helping Vodafone investors as Russia-Ukraine conflict takes the wind out of global markets

<ul><li><keyword id="1553175" type="COMPANY" weightage="20" keywordseo="Vodafone-Idea">Vodafone Idea</keyword> needs a combination of tariff hikes, government support and fund raising to survive in the market, say analysts.</li><li>The struggling telco has a total (adjusted gross revenue) AGR liability of ₹58,254 crore, out of which ₹50,339 crore is still due.</li><li>The gap between Vodafone Idea’s operating profit and the payments due may balloon to ₹18,800 crore in next two years.</li><li>Reports of an investment of more than $4 billion by Amazon and Verizon sent the stock rallying by 30% on September 3, suggesting that investors believe Vodafone Idea is in a dire situation.</li><li><a href="https://www.businessinsider.in/business/telecom/news/supreme-court-asks-airtel-vodafone-idea-and-others-to-pay-agr-dues-over-10-years/articleshow/77866137.cms">Check out the latest news and updates on Business Insider.</a></li></ul>Vodafone Idea is staring at a difficult road ahead. With the Supreme Court fixing a 10-year payment timeline for the adjusted gross revenue (AGR) dues, the struggling mobile service provider needs a combination of tariff hikes, government support and fundraising to survive. According to a report by Jefferies Equity Research, dated September 1, Vodafone Idea could require up to ₹18,800 crore by the end of March 2023. To do so, it will need to raise money since its existing operating profit is less than annual payments that will be due. Therefore, the Board is meeting today (September 4) to consider a proposal to raise funds. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.9978225000000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Particulars </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.9978225000000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Amount </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.9978225000000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Liabilities </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.9978225000000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Amount </td></tr><tr><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.9978225000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Free cash flow </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.9978225000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2,500 crore </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.9978225000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Annual AGR obligation </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.9978225000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹7,844 crore </td></tr><tr><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Operating profit (annualised) </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹6,100 crore </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Cost savings from Vodafone-Idea merger </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹4,000 crore </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td><td style="border-left:solid #000000 0.6260872500000001pt;border-right:solid #000000 0.6260872500000001pt;border-bottom:solid #000000 0.6260872500000001pt;border-top:solid #000000 0.6260872500000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr></tbody></table> Source: Company reports, Jefferies Equity Research Note: Annual AGR dues computed with an assumption of 9% interest rate per annum. But beyond FY21, the cash gap will widen to ₹4,200 crore and by FY23, it will balloon to ₹18,800 crore, the report states. <div type="Article" hostid="261" msid="77866137" title="Supreme Court directs Airtel, Vodafone Idea and others to pay AGR dues over 10 years" mstype="2" mssubtype="0"></div> What does Vodafone Idea need to do to survive? There are two ways for Vodafone Idea to continue its operations – tariff hikes and additional fund raising. In the first round of tariff hikes of 30%, Vodafone Idea’s operating profits increased by 20%. “Vodafone Idea may need additional support from the government in the form of a further 2-year moratorium on deferred spectrum liabilities to remain solvent beyond FY23,” the report added. <div type="Article" hostid="261" msid="76766763" title="Vodafone Idea News - Only cash can save Vodafone Idea from a slow death" mstype="2" mssubtype="0"></div> Apart from this, fundraising also remains a critical piece of the puzzle for the company. <a href="https://www.livemint.com/companies/news/amazon-verizon-may-give-voda-idea-lifeline-11599102122521.html">Reports</a> of an investment of more than $4 billion (approx. ₹30,000 crore) from US giants Amazon and Verizon led to a 30% jump in the company’s share price on September 3. Another <a href="https://www.bloomberg.com/news/articles/2020-09-03/vodafone-s-india-unit-is-said-to-plan-1-5-billion-fundraising">report</a> suggested that the company is planning $1.5 billion (approx. ₹7,400 crore) fundraising via stake sale. Vodafone Idea’s board is assembling today to evaluate any and all fundraising proposals it has received. If this deal goes through, Vodafone Idea will have enough room to breathe easy for now and meet its AGR obligations. It could also allow the company to undertake capital expenditure required to boost its network quality and stem the outflow of subscribers. SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/vodafone-idea-news-how-much-cash-does-vodafone-idea-need-to-survive/articleshow/76766763.cms">Only cash can save Vodafone Idea from a slow death</a> <a href="https://www.businessinsider.in/business/telecom/news/the-agr-verdict-could-lead-to-a-reliance-jio-and-airtel-duopoly-in-the-indian-telecom-sector/articleshow/77883407.cms">The AGR verdict could lead to a Reliance Jio and Airtel duopoly in the Indian telecom sector</a> <a href="https://www.businessinsider.in/tech/news/google-explores-5-stake-in-struggling-vodafone-idea-report/articleshow/76070370.cms">Vodafone Idea shares surge more than 30% after Google reportedly considers a stake in the debt-laden telco</a>

You Searched For "vodafone idea stake" and got 12 results

Vodafone Idea shares hit 25% upper circuit after govt agrees to convert ₹16,133 cr dues into equity

Rounak Jain

Vodafone raises stake to 47.61% in Vodafone Idea through subsidiary Prime Metals

PTI

The enormous gap between Vodafone Idea on one hand, Airtel and Jio on the other

Rounak Jain

Birla is reportedly ready to give Vodafone Idea to the Indian government

Rounak Jain

What if Vodafone Idea dies and can it be saved?

Business Insider India

Vodafone Idea board to meet on October 21 to consider fundraising via convertible debentures

Rounak Jain

Wary of churn, telcos want to get users hooked onto 5G before hiking tariffs

Rounak Jain

Government picking up a stake in Vodafone Idea ‘might be a remedy worse than the disease’, say experts

Rounak Jain

Vodafone Idea will have a solid ‘turnaround’ war chest if it clinches the Amazon deal

Rounak Jain

Vodafone Idea soars nearly 5% on fund infusion from Indus Towers stake sale

Prabhjote Gill

Even a big fundraise is not helping Vodafone investors as Russia-Ukraine conflict takes the wind out of global markets

Rounak Jain

Vodafone Idea may need up to ₹18,800 crore in next two years and tariff hikes to survive, says a new report

Rounak Jain

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