Vodafone Idea has been under a cash crunch since the last year. The Telecom Regulatory Authority of India (TRAI) reports have consistently been pointing out about the concerning churn rate of the telecom operator, which is just the opposite of the other telecom companies. While Reliance Jio and Bharti Airtel have been adding subscribers in the interim, Vodafone Idea has been losing subscribers except in the month of February this year. This was when the company announced its plans for a fundraiser back in 2020. However, apart from the lack of eager investors, the financial dues on Vodafone Idea, there was also the legal hurdle of the Foreign Direct Investment limit. However, it seems that Vodafone Idea is now free from one of the worries.
Vodafone Idea Allowed More FDI Now
Vodafone Idea’s proposal to the government of allowing foreign direct investment to the count of Rs 15,000 crore has now been approved. Previously, the telecom operator was limited by the investment governing laws of the country, where they could not seek more than Rs 15,000 crore from a firm abroad. At the behest of the news, the stock of Vodafone Idea rose by 6% as per a report by ET Telecom. This, of course, comes as good news for the telecom company.
Things Still Uncertain But
Although this is a step towards the positive side, still things are unclear for Vodafone Idea since the actual funding is nowhere in the picture right now. The telco was last in talks with Apollo Global Management for raising Rs 22,400 crore, a lot of which would go towards AGR dues. The funding structure was mainly to be based on an equity-based exchange. However, it remains to be seen from when and where Vodafone Idea raises funds. The telco’s survival is an imperative event for the dynamic balance in the telecom industry, which might deteriorate to a two-player mode in the absence of Vodafone Idea.