CAN THE FPO REVIVE FATE OF IDEA? VODAFONE

Success of ₹18,000 crore FPO would reinstate investors' faith in the telco faced with multiple challenges

- RAKESH KUMAR

VODAFONE Idea Limited チ COMPANY'S LOSSES NARROWED IN PAST THREE FISCALS FROM (VIL), India's third-largest tel- KEY HIGH OF FY21 AND FY20 ecom service provider, is pulling out all stops to raise funds from the market to improve its financial health.

The debt-laden telco, formed in 2018 when the UKbased Vodafone India Group merged with Indian Idea Cellular, has been bleeding with massive losses and fall in the number of subscribers, losing confidence of investors at large. After having raised about 7,000 crore from promoters since 2022, the telcohas announced a follow-on public offer (FPO) of 18,000 crore, the success of which would decide the fate of the company in the longer term.

After the merger of Vodafone and Idea, it became India's largest telecom operator with a market share of 32.2% in India. However, since then, it has lost a large chunk of its market share, and as per the Telecom Regulatory Authority of India (TRAI), it now holds 18.93% market share in the wireless segment as of February 2024.

This decline can be attributed to the lack of funds, accumulated debt, and insufficient investment in network upgrades. These factors have pushed the company to the third position in the Indian telecom market, with a continuous month-on-month loss in market share. Therefore, to arrest user loss and remain competitive, VIL requires significant amount of capital. But its efforts to raise funds for the last few years failed to yield any result. Meanwhile, its cash-rich competitors, Reliance Jio and Bharti Airtel, are leaving no stone unturned in investing in their infrastructure and network expansion.

Funds raised so far