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Friday, October 22, 2021

Will ‘Vi’ Avatar Change Vodafone Idea’s Luck; Fund raising from tariff

Vodafone Idea: The merger of both Vodafone and Idea took place at a time when the telecom industry was in huge debt. At the same time, consolidation was going on in the industry due to the data war of Jio. At the time of the merger, the balance sheet of both the companies was deteriorated. There also came a time when the owners of the company had to give a statement that if there is no relief from the government, the company will have to stop its operation. Currently, Vodafone Idea is seen in action after getting relief from the Supreme Court on the adjusted gross revenue. In this sequence, the company has now emerged as the new brand Avatar Vi. Will the company get success in changing its fortunes with the new brand name.

It is not that these companies have never been renamed before. Vodafone India was first known in India by the brand names Hutch and Vodafone. Apart from this, it has also done its branding as Max Touch. At the same time, Idea was previously named Idea Cellular. The names of Birla AT&T and Birla Tata & AT&T are also being identified. Then both companies merged and they were known as Vodafone Idea Limited. Now the new brand name of the company has become Vi.

Fund Raising from ARPU: Company in Action

Recently, the Supreme Court has given 10 years time to repay the dues to the company, giving its big verdict on the long-pending pending AGR issue. Although the demand of companies was to repay the arrears in 15 years, that too with a discount. This decision is a relief. However, the problem of Vodafone Idea does not seem to be going away so soon. But after this the company is in action. The board of the company has recently approved raising 25000 crores. Apart from this, there were clear indications from the company that it is going to increase the tariff further. This will increase her ARPU and she will be able to compete with Jio and Airtel.

How much is owed to the company?

Explain that the total AGR outstanding is Rs 1.69 lakh crore. Vodafone Idea owed Rs 58,254 crore, of which the company has paid an amount of about 8 thousand crores. Vodafone Idea still has to pay 50399 crores.

How the balance sheet will improve?

Brokerage House Motilal Oswal says that the balance sheet of Vodafone Idea will be weakened by this decision of the Supreme Court. In such a situation, the chances of tariff hike are being made once again. Talking about Vodafone Idea, if the company can run its operations properly after the payment, it will need to increase the commutary ARPU by Rs 110 by FY 2022 and 2023. But in this challenging environment, it will be difficult to do it immediately.

The expert believes that raising money will not be easy for Vodafone Idea. The pressure of interest and AGR payments on the company is much higher than before. The merger of Vodafone and Idea took place after the launch of Reliance Jio. However, even before merging, after the entry of Jio, both companies were under pressure due to data-wise. The situation did not improve even after the merger.

Amazon can make a big investment

Two major US companies Amazon and Verizon Communications can buy stakes in Indian telecom company Vodafone Idea for about $ 400 million (about Rs 29,600 crore). According to the media report, the talks between Amazon and Verizon Communications regarding the purchase of a stake in Vodafone-Idea Limited have been carried forward. Due to the decision of the Supreme Court on AGR, the negotiations on it were put to a break. However, now negotiations on the deal have started again.

25,460 crore net loss

The company’s net loss during the financial year ended June 2020 stood at Rs 25,460 crore. The company had a loss of 4,873 crores in the same quarter a year ago. The company’s revenue fell 5.5 per cent to 10,659 crore. While ARPU stood at Rs 114.

 

Source: www.financialexpress.com

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