India’s third-largest telecom service provider Vodafone Idea might get a fresh infusion of funds of around Rs 20,000 crore in the next two weeks.
It is likely that the telco might get around Rs 14,000 crore from the government in the form of returned bank guarantees (BGs) and another Rs 7,000 to Rs 8,000 crore from its promoters, including the Aditya Birla Group (ABG) and the Vodafone Group Plc.
This will immediately solve most of the cash flow issues of the company in the short term.
Further, the possible tariff hikes in the next two quarters will also go some way to ease the company’s financials
The telecom operator’s fundraising efforts have increased since the government announced a telecom assistance package in September, and the cash-strapped carrier.
This will help the company improve its average revenue per user (ARPU) and also put it into a position where it can reinvest in networks aggressively.
With the government giving the telecom operator the moratorium option for paying the dues, there won’t be any urgent need of paying a big amount to the centre. This alone will help the telco save a lot of its money.
With the improved networks, Vodafone Idea can add more subscribers and compete head-on with Reliance Jio and Bharti Airtel. The government has been of huge help to private telecom operators recently.
The centre has come up with relief measures for the telecom sector and is looking to help them further by coming out with new reforms in the future. The government is looking to reduce the litigation in the sector so that the telcos don’t have to waste their money and time fighting about almost everything inside the court.
Vodafone Idea is going to plough back funds for strengthening its 5G networks across the country.
In the past the telco has attempted to raise Rs 25,000 crore or bring in a strategic partner in the recent year but has been unsuccessful.
Vodafone Group Plc of the United Kingdom and the Aditya Birla Group of India currently own 44.39 per cent and 27.66 per cent, respectively, of Vodafone Idea as co-promoters