Vodafone-Idea's survival odds brighten, but it needs to do more to escape the quagmire
₹45,000 crore. It is set to raise over ₹20,000 crore this month, via the combination of a massive follow-on public offer (FPO), and a rights issue. Starting 18 April, the FPO targets a fund infusion of ₹18,000 crore, by selling shares in a band of ₹10-11, which is at a discount to the prevailing price.
Apart from this, the company has a commitment of ₹2,075 crore of fresh equity from the Aditya Birla Group (ABG) entity, Oriana Investments Pte Ltd, at ₹14.87 per share share. Following these moves, the equity base will rise by around 26%, and VIL then plans to ask lenders to front ₹25,000 crore in the form of loans, or maybe convertible debentures. It will use the funds to expand its network infrastructure, by setting up new 4G sites, enhancing the capacity at existing 4G sites, and start rolling out new 5G sites.
The competitive dynamics in the telecom services industry would improve substantially if VIL becomes a viable competitive entity. VIL has a subscriber base of 220 million subscribers (February 2024) making it the world’s sixth-largest network. Around 90 million subscribers are voice-only, using legacy 2G networks.
The company lags far behind the duopoly that is fighting for market leadership. Reliance Jio and Bharti Airtel have already rolled out countrywide 5G networks, and have 467 million and 384 million subscribers respectively. The super-fast 5G networks enable many new services and technologies focussed on enterprises. Jio and Airtel are looking to transition from being pure-play telcos offering telecom services to “techcos" offering value-added services like data centres, analytics support, etc.
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