Vodafone Idea (Vi) has been unable to invest in its networks in the capacity it should have for expanding 4G because it simply didn’t have the cash. But now, amid everything that is going in the industry, Vodafone Idea is planning to raise capital expenditure (capex) up to approximately Rs 15,000 crore or $2 billion per annum. The telco will get the cash required from an equity fusion from the current promoters as well as outside investors. The return of bank guarantees (BGs) would also help the telco a lot.
Vodafone Idea $2 Billion Would Come from Promoters and Outside Investors
According to an ETTelecom report, BNP Paribas, in a note, said that Vodafone Idea’s top-level management has indicated that the equity raise could happen by March 2022, and the promoters can also be a part of it.
It is worth noting that this is the first time that Vodafone Idea’s top-level management has officially said that the promoters will be investing equity into the company.
Kumar Mangalam Birla is expected to invest $150 million into the telco with his personal assets. Vodafone Group Plc, the largest promoter of Vodafone Idea, might sell a stake in Indus Towers to raise money for investment in the telco.
Vodafone Idea is already in talks with global firms for getting the required funding. With the tariff hikes, relief package in place, and another set of reforms coming soon, the outside investors would be much more comfortable in investing in the Indian telecom sector. Vodafone Idea needs plenty of cash to sustain its capex for both 4G and 5G in the coming years.
The cash-strapped telco needs as much support as possible from the investors. Vi’s shares closed at Rs 14.95 on Wednesday, which is still more than 50% higher than where it was a few weeks back, making the retail investors in the telco very happy.