VODAFONE IDEA PLANS TO RAISE $3.5 BN RIGHTS ISSUE
- Published | 30 January 2019
Vodafone Idea Ltd. finalized a rights issue to raise Rs 25,000 crore to fight against Asia’s richest man which will positively push the telecom services market in India.
India: Vodafone Idea Ltd (VIL), India’s biggest phone company by subscribers, has finalized a rights issue to raise Rs 25,000 crore to help bolster countrywide 4G coverage and take on Bharti Airtel and Reliance Jio Infocomm.“The Vodafone Idea board has approved the offer and issue of fully paid up and/or partly paid up equity shares of the company and/or other securities convertible into equity shares, including but not limited to, compulsorily convertible debentures, for an amount aggregating Rs 25,000 crore by way of a rights issue”. Separately, Vodafone Idea is also planning to sell its 11.5 percent stake in Indus Towers Ltd., a cell-phone tower company it jointly owns with Bharti Infratel Ltd and Aditya Birla Telecom.
“Vodafone Idea will use the funds to make network investments in 4G and forwarding off competition from Reliance Jio.”
According to Rishi Mallarh, analyst at BlueWeave Consulting, The telecommunication services industry is one of the fastest growing industries. India is currently the world’s second-largest telecommunications market. Telecommunications services have proved very beneficial for businesses as they facilitate effective communication with their customers and help establish a healthy relationship with them. The smartphone, a key application of the rapidly growing mobile telecommunication, includes an extensive range of applications and functions. The various types of mobile services are the internet, networking for home, networking for business, phone, television, etc., of which the phone and internet are the fastest growing services. The number of internet subscribers in the country is expected to double by 2021 to 829 million and overall IP traffic is expected to grow 4-fold by 2021.
Government Initiative: The government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. The Government of India is soon going to come out with a new National Telecom Policy 2018 in lieu of rapid technological advancement in the sector over the past few years. The Indian Government is planning to develop 100 smart city projects, where IoT would play a vital role in development of those cities. The policy has envisaged attracting investments worth US$ 100 billion in the sector by 2022. The Government of India has introduced Digital India programme under which all the sectors such as healthcare, retail, etc. will be connected through internet. The consumer and enterprise sector have witnessed increase in mobile data consumption as compared to other products and services offered by telecom operators.
According to BlueWeave Consulting upcoming report, Titled- “India Telecom Enterprise Services Market By Solution (Voice, Data/Internet Service, Wireless/Mobility, Managed Services, and Cloud Service) By End User (SME and Large Enterprise) By Revenue Stream (Master Agent, Carriers, VARs, and Telco Agents); Size and Forecast, 2014-2025” The Indian telecom enterprise services market has seen tremendous growth over the projected period. Factors enhancing the growth of telecommunications services are modern and advanced technology, market competition, investment in new telecommunication technologies like wireless communication and satellite, innovative services like e-education and e-agriculture, high-skilled technical manpower, affordability of services, demand for high-speed internet, data processing, etc. Government also providing room for growth for telecom companies which will promulgate the telecom market in India over a forecast period.