Amazon Likely To Participate In Vodafone Idea’s INR 20,000 Cr Fundraising

Amazon may be one of the investors in Vodafone Idea (Vi), the third-largest Indian telco by subscribers, which is looking to raise INR 20,000 Cr.

According to a report in The Ken, Amazon carried out due diligence on investing in the telecom service provider during the first quarter of 2021 and can invest in the company as it is the only major cloud service giant to have not invested in any Indian telecom company.

Vi’s managing director Ravinder Takkar recently said that the company was “closer than ever before” to raising INR 20,000 crore (around $2.6 Bn).

Shares of Vodafone Idea zoomed following the news of the Amazon investment and closed 4.14% higher at INR 9.30 on the BSE on Monday.

Many big tech companies have been investing heavily in India’s telecom sector. While Google and Facebook invested in Reliance Jio last year, Airtel got a $1 Bn cheque from Google earlier this year.

Vi’s Slow Turnaround

Vodafone Idea has been showing signs of a turnaround after spending the majority of 2021 amid fears of going bankrupt. The telco narrowed its loss by 36% to INR 28,245 Cr in FY22 from INR 44,253 Cr in FY21.

In the March 2022 quarter, Vi’s loss narrowed to INR 6,563 Cr from INR 7,230 Cr in the preceding December quarter. Revenue grew 5.4% quarter-on-quarter to INR 10,240 Cr.

However, the telco’s net debt ballooned to INR 1.96 Lakh Cr in the year ended March 31, 2022. Out of its total liability, Vi owes INR 1.8 Lakh Cr to the government in AGR and spectrum dues.

Overall, Vodafone Idea lost 3.4 Mn subscribers in Q4 FY22 but gained 1.1 Mn 4G subscribers, taking its 4G subscribers count to 118.1 Mn or 48.4% of its total subscriber base. Bharti Airtel has 200.8 Mn 4G subscribers, whereas market leader Jio has 410 Mn.

The boost in the more lucrative 4G customers and the recent tariff hikes helped Vi increase its average revenue per user (ARPU) to INR 124 in the March quarter from INR 115 in the December quarter. 

Following the announcement of a telecom relief package by the government in September 2021, Vi had decided to defer paying its adjusted gross revenue (AGR) and spectrum dues to the government by four years.

Further, it also opted to convert the interest incurred on deferred dues into equity, which resulted in the government becoming the majority shareholder in the company with a 33% stake.

In further relief to the telco, the Department of Telecommunications (DoT) has also returned bank guarantees (BGs) worth INR 16,000 Cr to it. Vi can use these BGs to pay off some of its institutional debt, which stands at INR 18,070 Cr.

Vi has been looking to raise funds for almost three years now. Besides, it is also looking to offload assets worth $1 Bn from its fibre network and data centres business.