Info-tech

Vodafone readies ₹47,700-crore war chest to take on rivals

Rajesh Kurup Mumbai | Updated on January 16, 2018 Published on September 22, 2016

Sunil Sood, Managing Director and CEO, Vodafone India

sood

Will use money to buy airwaves, fund network ramp-up and repay debt

Building a war chest ahead of the forthcoming spectrum auction, UK-headquartered Vodafone Group Plc has infused ₹47,700 crore into its Indian arm. The equity infusion, the highest by the British major since it acquired the India business in 2007, comes ahead of the next round of spectrum auctions, slated to begin on October 1.

Vodafone is the second-largest telecom operator in India, with 200 million subscribers.

“This is fresh equity and it will be used for acquisition of spectrum, expansion of network and deployment of next-generation technologies. A part of it could also be used for repayment of debt. This equity infusion via foreign direct investment (FDI) is the largest ever FDI and further manifests Vodafone’s increasing focus and commitment to India,” said Sunil Sood, Vodafone India Managing Director and Chief Executive Officer.

The fresh investment is a signal that Vodafone is now going on the offensive to take on rivals Airtel, Reliance Jio and Idea Cellular. The operator has been subdued in the past few auction rounds, missing out on garnering adequate spectrum for 4G services.

In the previous spectrum auction, which concluded on March 25, 2015, Vodafone spent ₹25,810 crore to acquire spectrum in the 900 MHz and 2100 MHz bands, both used for 3G services. In comparison, Bharti Airtel bid for airwaves worth ₹29,130 crore across the 900 MHz, 1800 MHz and 2100 MHz bands. While Airtel and Reliance Jio now have the ability to roll out 4G services across the country, Vodafone has a limited presence.

Some of the funding will also be used to pare the company’s debt, which stands at about ₹25,000 crore, as the operator prepares to list on the bourses.

IPO plans

“We have received a go-ahead (from the parent company) for an initial public offering (IPO) and we are preparing for it,” said Sood, without giving a timeline.

According to market estimates, Vodafone India is looking to raise between $2 billion and $3 billion through an IPO, which would potentially be the biggest in the country. The Mumbai-based company has a revenue market share of 22.5 per cent.

Vodafone had reported 5 per cent growth in services revenues to ₹44,303 crore at the end of March. In November 2015, it had announced fresh investment of ₹13,000 crore. This was, however, dwarfed by Bharti Airtel, which had announced an investment of ₹60,000 crore to ramp up its network.

Published on September 22, 2016
null
This article is closed for comments.
Please Email the Editor