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Telecommunications Provider Vodafone Idea’s shares zoomed 8.74% on Wednesday’s intraday trades on the back of heavy volumes, in an otherwise weak market. The share price of the company reached an intraday high of ₹ 9.95 apiece and had closed at ₹ 9.15 on Tuesday. 

The company’s shares were trading at their highest level since May 31, 2022. A combined 23.72 crore shares had changed hands by 12:17 PM on Wednesday.

Vodafone Idea was in the news recently, as its shares climbed 5% after it prepaid a ₹ 2700 crore loan to SBI in order to shore up lenders’ confidence. However, the ailing telco is urgently seeking fresh funds from banks to tie up equipment supply deals for 5G networks. 

Akshaya Moondra, the company’s newly named chief executive officer said that the company is in talks with various banks for funding arrangements. He added that Vi’s 5G launch timeline could be set only after these funds are arranged and gear procurements firmed up. No update was given on the company’s equity-raising plans. The company has been trying to raise ₹ 20,000 crores split between debt and equity.

The telco’s trade payables jumped almost 13.6% sequentially to ₹ 14956.2 crores. It plans to clear some of its near ₹ 15,000 crore trade payables that include dues to tower companies (~ ₹ 9500 crores), network gear vendors and other suppliers (~ ₹ 5,500 crores). Its net debt was more than ₹ 1.98 lakh crores and its deferred spectrum payment dues at over ₹ 1.16 lakh-crore and debt from banks and financial institutions at ₹ 15,200 crores. Its cash and cash equivalents were at ₹ 860 crores.

Vodafone Idea’s revenue from operations increased 13.7 per cent to Rs 10,410.10 crore in the June quarter as against Rs 9,152.3 crore a year ago. Its revenue growth was strong and the highest since its merger with Idea, on a year-on-year basis.

The company is focusing on improving its ARPU by driving UL/4G penetration as well as digitalization of customer servicing and distribution channels with an aim to provide the best customer experience to retail and enterprise customers. It is working on providing superior data and voice experience and building a differentiated digital experience with a focus on increasing 4G subscribers.

The telco has also completed its first tranche of fundraising in the form of a preferential equity contribution of around Rs 4,940 crore from its promoters. This includes ₹ 440 crores of infusion from the Vodafone Group in July 2022.

“All these initiatives coupled with the significant liquidity provided by the Government reforms package and the recent tariff hikes will enable the Company to make network investments and compete effectively to improve its competitive position,” the company said in its annual report.

In comparison with rivals

The cash-strapped company’s financially strong rivals, Reliance Jio and Bharti Airtel are already gearing up to launch 5G services next month. In fact, they have announced pan-India rollout timelines with plans to splurge top dollars. 

Jio and Airtel are expected to spend around $ 9.1 billion and $ 7.7 billion, respectively, on 5G Capex through FY 23-25. This could set them up nicely to corner more revenue share and target Vi’s top-end customers in the coming months if the latter is unable to respond to the challenge swiftly.

Bharti Airtel paid AGR dues of ₹ 8312.4 crores for the 5G Spectrum to the Department of Telecom and has paid four years of spectrum dues in advance. Further, it cleared ₹ 24333.7 crores of its deferred spectrum liabilities way ahead of scheduled maturities. 

Written by Simran Bafna

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