Vodafone Idea (Vi) has been struggling to get a grip on the Indian market. While the telco’s roots go long back in history, somehow, it has not managed to make a single rupee since the merger in 2018. To sort out its issues, the telco, just like every other major business is looking for funds from multiple sources to keep the business running. But it has been a difficult journey for Vi in terms of getting access to fresh capital.
The telco’s board had approved a fundraiser of Rs 25,000 back in September 2020. However, to date, the telco hasn’t been able to raise funds from any external investor. It has constantly been looking to its promoters for help.
Now, Vodafone Idea’s (Vi) board on Wednesday has approved a Rs 436.21 crore raise from the Vodafone Group UK. The company issued a statement saying that the board has approved the fundraising by the issuance of either – a) 42,76,56,421 equity shares of the face value of Rs 10 each or b) up to 42,76,56,421 warrants convertible into equity shares.
But how will this affect the company?
Vodafone Idea Not in a Great Position Anyway
Objectively looking, any help is a positive for the telco. But it is not even nearly enough to put Vi in a stable position. The telco will arguably need more than Rs 436.21 crore to pay the 10% upfront fee for the spectrum acquired through the upcoming auction. Further, the money is not even enough to expand 4G networks aggressively.
In simple words, while Rs 436.21 crore is not nothing; it isn’t a significant amount either. This kind of money will likely make a negligible difference in the business of the telco. However, one great thing is that Vi is already working to improve its networks.
The telco announced network improvements in Chhattisgarh and MP circle recently. In addition to that, TRAI MyCall data suggests that Vi’s mobile network is better than Jio and Vi in voice quality.
