Vodafone Idea (Vi), the third-largest telecom operator in the country, is likely going to get Rs 2000 crore from the promoters. The fund may be used to purchase 5G gear, as Vi has not even started deploying 5G networks while the other telecom operators have started offering commercial 5G services. The development has been reported by TNN. The talks around promoter funding come after the government converted the dues into equity in the struggling telco and has now become the largest stakeholder in the company.
Post the investment from the promoters, there could be a much larger debt raise, the report added. If Vi is able to get the funds from the promoters and use it for rolling out 5G, that would be a positive development for the potential future investors in the company. Vi has already completed the 5G trials with Ericsson and Nokia and now just needs to place commercial orders for the 5G equipment so that it can also deploy 5G.
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It is worth noting that Vi's operations have not improved much. The telco's loss widened in Q3 FY23 to Rs 7990 crore compared to Rs 7595 crore in the previous quarter. While the average revenue per user (ARPU) figure grew to Rs 135 in Q3 FY23 from Rs 131 in the previous quarter, it is still by far the lowest ARPU amongst the private telcos.
Vi needs to improve its cash flow and needs funding to move ahead. There are also concerns about being asked to return the spectrum to the government if the minimum deployment requirement is met by the telco. For the unaware, the government had set minimum 5G deployment criteria, which the telcos had to meet within one year or else they may be asked to return the spectrum to the centre.