Post the tariff hikes, Vodafone Idea’s stock has been soaring. One of the biggest boosts for Vodafone Idea’s future was the announcement of tariff hikes from Reliance Jio. With all the operators moving their tariffs up, there will not be that big a worry about subscriber market share to Vodafone Idea.
In the last few months, Vodafone Idea’s future has changed for the good. The telco firstly benefited from the relief measures announced by the government. Now, there are tariff hikes that will help with boosting average revenue per user (ARPU). On top of all this, the government is also working on the second set of reforms for the telecom sector.
Vodafone Idea Needs Cash to Invest in Networks
Vodafone Idea needs huge funding to not only pay off the debt but also be able to invest in its networks. Reliance Jio and Bharti Airtel are ahead of Vodafone Idea because both the operators have better cash resources and the ability to invest in networks more freely.
With all that has happened so far and what can happen in the future, there’s a big possibility that Vodafone Idea starts getting interest from outside investors. On multiple occasions, the telco has said that it is talking with potential investors. However, there’s nothing much has happened yet.
To really get the outside investors’ money flowing into the company, the promoters, including the Vodafone Group Plc of the UK and the Aditya Birla Group (ABG), needs to put their own money first. The outside investors will only feel confident in giving their money to the telco when the promoters show they can do the same and believe in the company’s future.
The telecom sector in India is paved towards the path to recovery. The current tariff hikes bundled with the relief measures will help the telecom sector in seeing faster growth. It will also help the operators in maximising their network investments when the 5G rollout comes near.
Kumar Mangalam Birla Expected to Invest $150 Million in Vodafone Idea
Kumar Mangalam Birla, who is no longer the Chairman of the Vodafone Idea, might give $150 million to the telco in his individual capacity. A Livemint report suggested that the company might issue fresh convertibles or equities, and Birla is expected to invest in the telco through personal assets.
At the same time, Vodafone Group Plc is also expected to raise capital by selling a stake in Indus Towers and use the money received to invest in Vodafone Idea. Note that none of this has been confirmed by the company itself. Thus, there’s no way of saying whether this will actually happen or not.