A Rs 45,000-crore survival act

With a plan to raise substantial funds, Vodafone-Idea aims to revitalise its struggling telecom business and compete in the 5G era. Will it work?

- VOICE&DATA BUREAU

Vodafone-Idea, India's third and thereby the smallest private sector telecom operator, recently announced that its board of directors has cleared a plan to raise Rs 20,000 crore (USD 2.4 billion) through equity and equity-linked instruments. Overall, the company aims to raise Rs 45,000 crore (USD 5.4 billion), taking into account a new round of debt that the cash-strapped telecom operator seeks to raise.

The fund will inject the much-needed lifeline into the telecom operator, which has for long been losing users and is swamped with debt. However, much of the funding will depend on Vodafone-Idea's ability to attract the right strategic investors, who can make use of the most lucrative assets that the operator possesses.

THE STATE OF AFFAIRS

Vodafone-Idea presently has a debt of over Rs 2 lakh crore, most of which is owed to the central government from the operator's purchase of network spectrum from the government. At this moment, the Centre is the single largest shareholder in Vodafone-Idea, which became a combined entity after the merger of Vodafone India and Idea Cellular in August 2018. Overall, the Department of Investments and Public Assets Management (DIPAM) holds a 33.1% stake in the operator. Vodafone's parent group, Britain's Vodafone PLC, holds 32.3%, while domestic promoter, the Aditya Birla Group, holds 18.1% of the company. Public shareholders have the rest 16.5% of the telco.