Vodafone Idea Chairman Says Banks Will Soon Need to Rethink Strategy

Vodafone Idea had last year got the approval from the board to raise up to Rs 25,000 crore from outside investors. But unfortunately, due to the state of the sector and the telco’s financials, Vodafone Idea couldn’t get any funding. The telco’s stock is up by 14% on Thursday and is trading above Rs 16.30.

Highlights

  • The world is shifting towards a digital ecosystem of banking and payments.
  • The telco had last year got the approval from the board to raise up to Rs 25,000 crore from outside investors.
  • The bank guarantees (BGs) have been reduced by up to 80% freeing up more cash for the telcos.

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Vodafone Idea

The world is shifting towards a digital ecosystem of banking and payments. The online transaction volume for digital payments is expected to rise over to 70% in 2025 from 39% in 2021. This will compel banks to rethink their brick and mortar strategy, says Himanshu Kapania, Vodafone Idea Chairman. Kapania noted that the “groceries and apparel” segment were the key drivers of e-commerce growth in India.

Global Investors Are Acknowledging Sectoral Reforms Announced by the Government

Speaking at the Indian Mobile Congress (IMC) 2021 event, Kapania said that the global investors are acknowledging the sectoral reforms or the bailout package announced by the government. It is no hidden knowledge that Vodafone Idea is aggressively looking for a global investor/investors to raise funds.

The telco had last year got the approval from the board to raise up to Rs 25,000 crore from outside investors. But unfortunately, due to the state of the sector and the telco’s financials, Vodafone Idea couldn’t get any funding.

But things have changed now. The reforms will let the telcos work stress-free, and with the tariff hikes, the average revenue per user (ARPU), as well as the overall revenues of the telcos, will increase.

Even the bank guarantees (BGs) have been reduced by up to 80% freeing up more cash for the telcos. On Wednesday, Business Standard reported that Vodafone Idea has managed to raise funds and that it will repay the bonds on time, but the details about the same haven’t been confirmed by the company yet.

Vodafone Idea’s stock is up by 14% on Thursday and is trading above Rs 16.30. Vodafone Idea certainly needs heavy funding because it is not just the networks that the telco needs to invest in, but also the 5G spectrum auctions will require a lot of money in the bank. The telco’s stock has jumped more than 50% in the last few days.

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