Vodafone Idea on Friday said that there was “no proposal” that was being considered by its board as it issued a clarification on the report of Google eyeing an 5% stake in its company. The second largest telecom provider in India was responding to the clarification sought by the BSE on Friday over the reports of Google eyeing a stake in Vodafone. The shares of Vodafone Idea surged as much as 35% on Friday before closing the trade at 12% above its closing price on Thursday. The British telecom giant Vodafone holds about 45% stake in Vodafone Idea with its Indian venture staring at unpaid dues of over Rs 55,000.
Vodafone Idea Constantly Evaluates Various Opportunities
With Facebook acquiring an 9.99% stake in Reliance Jio in April, Google’s stake in Vodafone Idea could have pitted two US tech giants on a collision course in the tight Indian telecom market.
“As part of corporate strategy, the Company constantly evaluates various opportunities for enhancing the stakeholders’ value,” Vodafone Idea said in its clarification to the BSE. “Currently, there is no proposal as reported by the media that is being considered at the Board.”
Vodafone Idea’s share prices were trading at the day’s high of Rs 7.85 around 10 am on Friday before closing the day at Rs 6.56. Crucially, the share prices dipped from Rs 7.40 to Rs 6.40 around the time of Vodafone Idea issuing its clarification on the news story.
The Google stake could have aided Vodafone Idea with some much needed equity especially as the British major highlighted that no fresh equity will be injected into its Indian business.
Vodafone will Not Inject New Equity into Vodafone Idea
In its fourth quarter and FY20 earnings call in the second week of May, Nicholas Read, CEO of Vodafone Group said that Vodafone will not inject new equity into its Indian venture. Read said that the Indian venture which was already under a critical situation was put under further financial strain due to COVID-19 situation.
“The business requires a government support package if India wants to maintain a ‘3 plus 1 player’ telecoms market,” Read said in the earnings call.