Vodafone Idea Might Finally Get Fresh Capital from Promoters

Vodafone Idea stands to benefit from the relief package in a major way. But for an outside investor to show confidence at a time when the promoters aren’t too optimistic about putting their money is a big red flag.

Highlights

  • Vodafone Idea stands to benefit from the relief package in a major way
  • If the promoters add their money to raise capital for the company, it would show an outside investor that the company is still backed
  • A possible tariff hike will result in an increased average revenue per user (ARPU) for the telecom industry

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Vodafone Idea

Vodafone Idea (Vi) might soon see its promoters including the Aditya Birla Group (ABG) and Vodafone Group Plc infusing fresh capital into the company. However, note that nothing is confirmed at the moment and a final decision related to the equity capital will only be taken at the board level. This makes sense because Vodafone Idea needs an external investor, they need to first see what the promoters feel about the company.

Vodafone Idea to Benefit from Relief Package

Vodafone Idea stands to benefit from the relief package in a major way. But for an outside investor to show confidence at a time when the promoters aren’t too optimistic about putting their money is a big red flag.

Thus, if the promoters add their money to raise capital for the company, it would show an outside investor that the company is still backed and there’s a vision for its future after all. A Fortune India report citing sources said that Vi promoters might add their money into the company in the form of equity.

This should ideally happen given Vodafone Idea has a strong chance of not only surviving but also thriving with the relief package in place. If the telco’s short and medium-term cash flow issues are sorted, it will be able to invest aggressively in its networks and services. With 5G around the corner, the telcos are expected to more than double their enterprise revenues.

Also, a possible tariff hike will result in an increased average revenue per user (ARPU) for the telecom industry that will further benefit Vi. This is high time for the promoters to add some of their own money into the company and show their confidence in its future. Earlier, the promoters had cleared their intent of not infusing any further capital into the company given its state. But, after the relief package, things should change and the promoters might reconsider their earlier stance.

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Tanay is someone with whom you can chill and talk about technology and life. A fitness enthusiast and cricketer, he loves to read and write.

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