In one of the major signs of support, some of the biggest investment funds were also reported to have committed to take part in Vodafone Idea’s mega Rs.18,000 crore stock issue. The financially troubled cellular operator has decided to raise more money by selling some of its shares. It wants to use the money in the 5G network installation and to reduce its loan.
Fidelity and GQG Partners, which both are the pioneers in the market are leaving no stone unturned. Besides, domestic funds are also contributing like HDFC Mutual Fund and Quant Mutual Fund. The underwriters promised to purchase a defined number of shares before the issue date to demonstrate their belief in the project. The investors’ support here should show a strong belief that given this huge infusion of cash, Vodafone Idea can still turn things around.
Like the FPO announcement made by the Indian firm, this is indeed the largest of all time, which points out how crucial it is for Vodafone’s survival. The company had been losing customers and slices of market share at the hands of its rivals, Jio, and Airtel, in a devastating pricing war over several years already. With over Rs. 1.It slithered to Rs. 8 lakh crore total debt and had almost fallen, if recent government bailout measures were not taken.
Now, the telco wants to use most of the FPO cash to build a powerful 5G network, seen as key for the next phase of growth. It plans a massive rollout covering 40% of high-paying users within 2-3 years. This will allow Vodafone Idea to finally compete on an equal technological footing and stem customer losses.
Analysts say while meaningful market share gains may still be difficult, a stronger balance sheet and network can improve Vodafone Idea’s competitive positioning. The FPO’s success would also give it more financial flexibility to negotiate network equipment purchases and pay off AGR dues.
With global and domestic funds ready to pump in billions, Vodafone Idea seems to have gotten a new lease on life. Investors will hope the company can leverage this opportunity to stabilize operations and give India desperately-needed choice in the telecom sector. The next few quarters will be crucial to see if the telco can get its mojo back with 5G as its new growth driver.
Major funds like Fidelity, GQG Partners and HDFC Mutual Fund are set to anchor Vodafone Idea’s record Rs 18,000 crore follow-on public offering, demonstrating strong investor confidence in the telco’s turnaround plans to strengthen its network and balance sheet with the fresh capital raise.
