India's Vodafone Idea might get a lifeline if a $4 billion investment from Amazon and Verizon comes through, according to media reports.
The sales talks resumed after the Supreme Court's judgment this week granted ten years to telcos to repay Adjusted Gross Revenue (AGR) dues. The investment talks were put on hold earlier because of uncertainty surrounding the AGR judgment.
Now, with ten years to clear AGR dues, Vodafone Idea has a good chance of surviving in the Indian market. The company has already made a payment of INR78.5 billion (US$1 billion) out of its total dues of INR504 billion ($6.9 billion).
However, to upgrade and expand its network, Vodafone Idea needs an infusion of funds. The company has been losing market share: Its subscriber base of 320 million at the end of June 2019 fell to 279.8 million in June 2020.
A part of this loss of subscribers might be due to tariff hikes and SIM consolidation during the lockdown. Even so, the company must take measures to enhance coverage and improve quality to stop the churn, such as moving its significant number of 2G subscribers to the 4G network. A growing number of Indians are now using broadband for personal and professional work, especially during the ongoing COVID-19 pandemic.
Further, Vodafone Idea will need funds to participate in the upcoming spectrum auctions, with the 4G auction to be held this year, and 5G spectrum scheduled for next year.
While none of the parties have gone on record to confirm discussions, talks between Indian ISPs and tech giants have been ongoing.
Earlier this year, Google was reportedly in talks with Vodafone Idea for a potential stake purchase, while Amazon was in discussions to buy a stake in Bharti Airtel, a Vodafone Idea competitor. Verizon also made news for collaborating with Airtel to launch its BlueJeans videoconferencing service in India.
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- Axiata Group sells stake in India’s Vodafone Idea
- Vodafone Idea risks entering India's graveyard of telcos
- Google explores 5% stake in Vodafone Idea – report
— Gagandeep Kaur, contributing editor, special to Light Reading