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

Vodafone Idea will have a solid ‘turnaround’ war chest if it clinches the Amazon deal
Vodafone Idea has been looking to raise funds for nearly three years nowBCCL
  • Vodafone Idea could be close to clinching an investment of ₹20,000 crore – something that it has been looking for since 2020.
  • This probable fundraise comes less than two months after its promoter, Vodafone Plc. pumped in ₹4,500 crore via its equity arms.
  • 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.
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 trying to raise ₹25,000 crore 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.

Vodafone Idea will have a solid ‘turnaround’ war chest if it clinches the Amazon deal
Vodafone Idea share price in 2022BSE / Business Insider India / Flourish

According to a report by the Economic Times, 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 needs ₹25,000 crore to turn around its fortunes and remain competitive – of this, it has already raised ₹4,500 crore 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.

Vodafone Idea continues to lose millions of subscribers every month

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.

Vodafone Idea will have a solid ‘turnaround’ war chest if it clinches the Amazon deal
Net subscriber additions in 2021-22TRAI / Business Insider India / Flourish

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.

Vodafone Idea in talks with Amazon, PEs for 20000 Cr investment. Looks like this triggered today's up move. Stock trading above previous resistance levels of 9.4, may see 11.5+ levels in coming days. Bullish! $IDEA.NSE

— (@SriFunCharts) May 31, 2022

Vodafone Idea, on the other hand, is yet to see a single dollar from them. Amazon was said 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.


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