scorecardWe finally know why the Vodafone Idea stock rallied over 50% in the last one month
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We finally know why the Vodafone Idea stock rallied over 50% in the last one month

We finally know why the Vodafone Idea stock rallied over 50% in the last one month
Business2 min read
Will the fundraising and capex increase bring Vodafone Idea back in the game?    BCCL
  • The Vodafone Idea stock has seen a massive uptrend over the last one month.
  • According to a new report, Vodafone Idea could finally be ready to raise equity, either from the promoters or private equity firms or both.
  • The market seems to have caught a whiff of it, sending the stock rallying by over 50% in the last one month.
Shares of Vodafone Idea have rallied by over 50% in the last one month, bringing back cheer to the shareholders of the company who have shown their faith while the telco was running on fumes over the past one year.

In early trade on December 16, Vodafone Idea’s shares were up by nearly 3% when compared to the previous closing price.

Vodafone Idea 01_11_21 to 16_12_21.
Vodafone Idea share price over the last one month      BSE / Business Insider India / Flourish

The rally seems exceptional, especially in the absence of any major positive for the company – Vodafone Idea’s subscriber attrition hasn’t slowed down, and its average revenue per user (ARPU) is significantly lower than that of its rivals, at just ₹109 versus Airtel and Reliance Jio’s ₹153 and ₹143, respectively.

So, what gives? Reportedly, the promoters of the company are aiming to increase the annual capital expenditure by four-fold to $2 billion (approx. ₹15,200 crore).

Clearly, the market caught a whiff of it.

It’s not the first time that reports have claimed Vodafone Idea will infuse equity, but this time, it’s coming straight from the horse’s mouth – the report adds that these comments were made by the company’s senior management at an internal investors’ call this week.

The increase in capex could help the telco catch up to its rivals Airtel and Reliance Jio in terms of technology and other aspects.

Business Insider has reached out to Vodafone Idea for comments.

For instance, Vodafone Idea did not launch Voice over Wi-Fi (VoWiFi) for several months after Airtel and Reliance Jio announced support across the country.

Vodafone Idea currently spends an estimated $500 million (approx. ₹3,800 crore) in capex, while its rivals Airtel and Reliance Jio spend $3 billion (approx. ₹22,800 crore) each.

At the end of September, 2021, Vodafone Idea had ₹250 crore in cash and cash equivalents, while its debt stood at ₹1.94 lakh crore. A four-fold boost is only possible if either the promoters, or private equity firms are ready to plough in equity into the third largest telecom company in India.

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