Vodafone UK Now Owns 47.61% Stake in India’s Vodafone Idea

The Indian government might return Rs 15,000 crore worth of bank guarantees to Vodafone Idea (Vi). This would help the telco in addressing its short-term cash flow issues. With 5G spectrum auctions nearby, Vi would like to have as much as free cashflow as possible.

Highlights

  • Vodafone Group Plc has increased its stake in the cash-strapped Vodafone Idea Limited (VIL) from 44.39% to 47.61%.
  • Vi’s board had approved the allotment of 338.3 crore equity shares at Rs 13.30 per scrip to three promoter group entities including Prime Metals, Euro Pacific Securities, and Oriana Investments.
  • Vi is raising a total of Rs 14,500 crore from the market where Rs 4,500 was supposed to come from the promoters.

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Vodafone Idea

Vodafone Group Plc, a British telecom giant, has increased its stake in the cash-strapped Vodafone Idea Limited (VIL) from 44.39% to 47.61%. Prime Metals, a subsidiary company of Vodafone UK has, submitted this in a regulatory filing on Monday.

It is worth noting that on Thursday, Vi’s board had approved the allotment of 338.3 crore equity shares at Rs 13.30 per scrip to three promoter group entities, including Prime Metals, Euro Pacific Securities, and Oriana Investments. This helped the Indian telecom operator raise about Rs 4500 crore.

Vi is raising a total of Rs 14,500 crore from the market, where Rs 4,500 was supposed to come from the promoters. For the remaining Rs 10,000 crore, the telco is talking with other investors globally.

Vodafone Idea to Also Benefit from BGs When Returned

To add the cherry on the cake, the government might also return Rs 15,000 crore worth of bank guarantees to Vodafone Idea (Vi). This would help the telco in addressing its short-term cash flow issues. With 5G spectrum auctions nearby, Vi would like to have as much free cash flow as possible.

Further, the telco also has to address the low capex levels for the 4G expansion. Airtel and Jio have been adding new active subscribers because Vi isn’t able to aggressively invest in 4G networks as it doesn’t have the kind of money needed. ‘

There are also telecom reforms 2.0 in the works. The first set of telecom reforms was supposed to solve the problems, and the second set of telecom reforms will help with unleashing growth, Ashwini Vaishnaw, IT and Telecom Minister of India, had said earlier.

The first set of relief measures helped Vodafone Idea (Vi) to become slightly stable. The second set of reforms should further help the Indian Telecom operator in boosting its growth.

Telcos have requested the government for easier spectrum payment terms. If that is considered, that would also be a helping factor for Vodafone Idea and the entire telecom industry.

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