New Delhi: Vodafone Idea happens to be one of the prominent names when it comes to India’s Telecom Industry but, so far, the company isn’t doing too great a job in its journey now as it looks like. There have been heavy losses facing the company and the stock price has declined by around 50% in the last couple of months. For example, in November 2024, its stock traded at ₹6.61, which was down from ₹19.18 a few months ago. Instead of losing hope, Vodafone Idea is trying to change the scenario.
The company is raising ₹1,980 crore through issue of new shares to help mend its financial woes. It has proposed issue of up to 175.53 crore shares at ₹11.28 each, thereby helping it to some extent pay off the debt and bring itself back on track. The majority of the funds raised will be channeled towards two companies that are part-owned by Vodafone’s parent company, Vodafone Group: Omega Telecom Holdings and Usha Martin Telematics. The money will increase both companies’ stakes in Vodafone Idea. Omega Telecom has had a stake of 0.40% that is increased to nearly 2% with Usha Martin from its earlier percentage standing of 0.13% increasing its now to 1%.
Strategy in Financial Crisis and Recovery
Vodafone Idea is also passing through financial stress. Its landslide fall of nearly 50% has come in within six months alone. And in November 2024, the stock value saw a downfall to ₹6.61 from ₹19.18. Yet still, the company is emerging out of that mess. Vodafone Idea has reported a smaller loss for Q2FY25 at ₹7,175.9 crore, where it had reported ₹8,746.6 crore during the same quarter of 2023. It is one of the most significant reasons they improved by hiking mobile service rates between 11-24% in July 2024, thereby raising average revenue per user to 7.8% from ₹166. Their total income had also gone up slightly to ₹10,932 crore against ₹10,716 crore the previous year.
But it is not just a process of price increase. Vodafone Idea has also resolved to clear their debt. They would issue equity shares worth ₹2,458 crore to suppliers such as Nokia and Ericsson for clearing some bills. In turn, these suppliers will earn an equity interest in Vodafone Idea, and Nokia will have 1.5% and Ericsson will have 0.9%.
Outreach Network
Along with strengthening its financials, Vodafone Idea is upgrading its network across all the region. They are investing in improving their 4G services and are getting ready to launch 5G. With the Indian telecom market growing fast, such upgrades are crucial to compete with others. The launch of 5G will give the company a big boost in the future.
Analysts are hopeful but cautious about Vodafone Idea’s turnaround. While the new measures are being perceived as a welcome move, with so much debt to service still remaining, they have much to do. If it consolidates its finances and improves its network further, it can well regain the telecom market in style.
