Voda revival plan led by Rs 14k cr equity infusion

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On Wednesday, June 14, Vodafone Idea’s stock saw a jump of more than 7%. In the first 5 minutes of trading, the stock touched an intraday high of 8.25 and the closing also happened with a gain of about 4%. Actually, Vodafone Idea has put forward a proposal of investment of Rs 14,000 crores under the company’s business revival plan. Under this proposal, the company’s promoters Aditya Birla Group and UK’s Vodafone Group will make half of the investments. According to the revival plan submitted to the government earlier this month, Aditya Birla Group and Vodafone Group may very soon infuse fresh equity of Rs 2,000 crores in the company.

After the revival package given by the government in September 2021, the promoters have invested fresh equity of Rs 5,000 crore in the company and the promoters will work with the company to raise the remaining amount of Rs 7,000 crore. This amount will be raised directly from an external investor through equity or convertible instruments. Not only this, apart from this revival plan, the company is seeking an additional loan of Rs 25,000 crore from its lenders. This is because according to analysts, the company may face a cash crunch of Rs 25,000 crore in FY26.

Vodafone has faced tough times since last few years. Company seems to be loosing competition against Reliance Jio and Airtel. These companies are dominating the telecom space and there are even speculation that we are moving towards duopoly in telecom industry. Subscribers are also leaving Vodafone. If the industry would move duopoly then it could become detrimental for the users as they would be lower competition. So infusion of capital in Vodafone increases the chances of viability of company and gives hope that industry might not move towards duopoly.