Vodafone Group and Aditya Birla Group may infuse $400 million in Vodafone Idea to support the company clearing off dues and growth, it's been reported.
The promoters of Vodafone Idea, Vodafone Group and Aditya Birla Group may infuse $400 million in Vodafone Idea to support the company in clearing off dues and building strength for the next level of growth, according to media reports.
Both promoters will invest around $200 million each to retain their stakes in Vodafone Idea once it raises funds from external sources.
It is also possible that Vodafone Group may sell a part of its 28.1% stake in Indus Towers, and use the funds to revive Vodafone Idea. Vodafone Group and Aditya Birla Group have 44% and 27% stake in Vodafone Idea, respectively.
Big relief
The government has recently announced several measures, including a four-year moratorium for unpaid regulatory dues, 100% foreign direct investment and a change in the definition of adjusted gross revenue (AGR), which were designed to provide relief to Vodafone Idea as it faced closure because of massive debt.
The relief measures also give more time to the company to get investment. A significant part of Vodafone Idea's $3 billion debt is because of several regulatory, AGR and spectrum dues that it owes to the government.
Both companies had refused to invest more funds in the company before the administration announced measures that would help it survive in the short term.
Interested in Asia? Check out our dedicated content channel here on
Light Reading.
In September, Vodafone Idea approved a plan to raise funds of INR250 billion ($3.31 billion) from external investors. However, it still needs funds to carry out day-to-day operations.
Infusion of funds will help the company participate in the upcoming 5G spectrum auction, expand its 4G network coverage, and invest in network modernization. Further, Vodafone Idea has been losing subscribers and consequently market share. Availability of funds will help the company prevent subscriber churn and improve its competitiveness.
Vodafone Idea has been trying to get investment for more than a year but without any success. The key hurdle was uncertainty regarding Vodafone Idea's future as well as the unfavorable regulatory environment.
However, now the government has changed policies and made its intent clear to have at least three private service providers, Vodafone Idea is better placed to acquire funds.
Related posts:
— Gagandeep Kaur, contributing editor, special to Light Reading
Read more about:
AsiaAbout the Author(s)
You May Also Like