Vodafone Idea, the third-largest telecom service provider (TSP) in India, might get around Rs 20,000 crore in the next two weeks. According to an ET Telecom report, the telco might get around Rs 14,000 crore from the government in the form of returned bank guarantees (BGs) and another Rs 7,000 to Rs 8,000 crore from its promoters, including the Aditya Birla Group (ABG) and the Vodafone Group Plc. This should solve most of the cash flow issues of the company in the short term.
Tariff Hikes, Fund Raise, and Improved Networks to Help Vodafone Idea Thrive
The possible tariff hikes in the next two quarters on top of the fundraising plans will immediately solve all the cash crunch issues for Vodafone Idea. This will help the telco improve its average revenue per user (ARPU) and also put it into a position where it can reinvest in networks aggressively.
With the government giving the telcos the moratorium option for paying the dues, there won’t be any urgent need of paying a big amount to the centre. This alone will help the telco save a lot of its money.
With the improved networks, Vodafone Idea can add more subscribers and compete head-on with Reliance Jio and Bharti Airtel. The government has been of huge help to private telecom operators recently. The centre has come up with relief measures for the telecom sector and is looking to help them further by coming out with new reforms in the future. The government is looking to reduce the litigation in the sector so that the telcos don’t have to waste their money and time fighting about almost everything inside the court.
Vodafone Idea is going to use all of the cash it is able to raise for 5G and further expanding the reach of its networks around the country. With all that’s been happening in the telecom sector recently, it won’t be a surprise to see an outside investor jumping to get a stake in Vodafone Idea.
