Vodafone plans to infuse ₹47,700 crore to take on rivals
The fresh investment may enable Vodafone to take on the challenges from rivals Airtel, Reliance Jio and Idea Cellular
Vodafone India plans to infuse ₹47,700 crore into its Indian business. This would make it the biggest FDI infusion story. The equity infusion, the highest by the British company since it acquired the India business in 2007, comes ahead of the next round of spectrum auctions, which may begin on October 1. Vodafone is the second-largest telecom operator in India with 200 million subscribers.
“This is fresh equity and it will be used for the acquisition of spectrum, expansion of network and deployment of next-generation technologies. A part of it could also be used for repayment of debt. This equity infusion via foreign direct investment (FDI) is the largest-ever FDI and further manifests Vodafone’s increasing focus and commitment to India,” said Sunil Sood, Vodafone India Managing Director and Chief Executive Officer at a press briefing in Mumbai.
The fresh investment may enable Vodafone to take on the challenges from rivals Airtel, Reliance Jio and Idea Cellular. It has been subdued in the past few auction rounds, missing out on the collection of spectrum for its 4G services.
In the previous spectrum auction, which concluded on March 25, 2015, Vodafone spent ₹25,810 crore to acquire airwaves in the 900 MHz and 2100 MHz bands, both used for 3G services. In comparison, Bharti Airtel bid for airwaves worth ₹29,130 crore across the 900 MHz, 1800 MHz, and 2100 MHz bands. While Airtel and Reliance Jio now have the ability to roll out 4G services across the country, Vodafone has a limited presence.
Sood said part of the funding will be used to retire the company’s old debt, which stands at about ₹25,000 crore.
Vodafone is also preparing to list on the bourses. “We have received a go-ahead (from the parent company) for an initial public offering (IPO) and we are preparing for it,” said Sood, without giving a timeline.
Market analysts believe that Vodafone India may be aiming to raise between $2 billion and $3 billion through the IPO, which would make it the biggest in the country. The Mumbai-based company has a revenue share of 22.5 percent in the total telecom business.
Vodafone reported a 5 percent growth in services revenues to ₹44,303 crore at the end of March 2016. In November 2015, it had announced a fresh investment of ₹13,000 crore. This was, however, dwarfed by Bharti Airtel, which had announced an investment of ₹60,000 crore to ramp up its network.