Tag: Vodafone Idea Ltd

Bharti Airtel: Tariffs ‘absurdly low’, ‘substantial’ hike needed

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bharti Airtel on Wednesday, May 15, said mobile tariffs in India are at “absurdly low levels” compared to anywhere in the world and that “substantial repair” is absolutely needed.

The telco also said India will be well served if it has three mobile operators instead of a duopoly. The three major operators in India are Reliance Jio, Bharti Airtel and Vodafone Idea.

The telecom giant, which reported its quarterly earnings on Monday, May 15, said it added 6.7 million subscribers in the last quarter of the 2023-24 fiscal versus an estimate of 3.5-4 million. However, its Average Revenue Per User (ARPU) increased only 0.5% to ₹209 on a quarterly basis, which was lower than the company’s estimates.

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Experts discuss latest developments in telecom and what lies ahead

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The recent developments at Vodafone Idea, marked by a successful ₹18,000 crore follow-on public offer (FPO) and the Aditya Birla Group’s strategic ₹2,075 crore equity infusion, have ignited a wave of optimism in the telecom sector.

In a discussion with CNBC-TV18, Sanjay Kapoor, former CEO of Airtel, and telecom expert Prashant Single, and Purushothaman KG, Partner and Head of Digital Solutions and Telecommunications Industry Leader at KPMG India shared their views about the future of Vodafone Idea, tariffs, and the overall competitive landscape of the industry.

Kapoor calls the current situation in the space ‘enigmatic’.

“So as far as the market is concerned and the consumer is concerned, it is the right thing to have happened because three private players in a market like us gives a lot of choice to the consumers. And therefore, brings that balance on customer service and experience over a longer period,” he said.

However, he noted that despite the fresh funds, the overhang of ‘too little too late’ will still be affect Vodafone Idea till it delivers and is back into the game.

Also Read | Vodafone Idea FPO opens today: CEO explains how the funds will be used

Vodafone India plans to use 70% of the funds raised to strengthen its network infrastructure and broaden its market reach.

Prashant Singhal, a telecom expert believes there is more than enough space in the telecom market for a third player to play catch up.

“The response on the Vodafone Idea FPO clearly shows that there is a lot of interest and there is a lot of confidence in the company,” Singhal said.

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Kapoor thinks the Indian telecom market needs higher pricing.

“We are on the lowest end of the spectrum on pricing when you compare it across the globe,” he said.

According to Purushothaman, the sector is doing well because it is the foundation of the digital economy.

“From a sector perspective, you might have seen quarter-on-quarter (QoQ) growth, improvement in the sector not only from a tariff perspective but also steady subscription growth. The tariffs have improved and that has helped to improve the average revenue per user (ARPU) for most of the operators,” he said.

For more, watch the accompanying video

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Vodafone Idea FPO allotment status likely on April 23: Check steps to know share allocation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vodafone Idea FPO share allotment status is expected to be finalised on Tuesday, April 23, following the successful closure of its subscription. The follow-on public offer of the telco was open for subscription from April 18-22.

The Vi FPO was subscribed more than 6 times on the final day of bidding on Tuesday, aided by a strong demand from the qualified institutional buyers (QIBs). The FPO was overall subscribed 6.36 times while the QIB portion was booked 17.56 times. The non-institutional investors (NIIs) segment was subscribed 4.13 times. The retail segment was booked only 92%.

Vodafone Idea FPO shares are expected to get listed on both BSE and NSE on April 25.

The investors, who participated in the Vodafone Idea bidding are now waiting for the share allotment status. The applicants can check the share allotment status though the NSE and BSE websites as well as the official website of the FPO registrar, Link Intime India Private Ltd.

Steps to check Vodafone Idea FPO allotment status on BSE

·      Click on the link ‘IPO Allotment Status Check’ on the home page.

·      Select the equity option.

·      Choose “Vodafone Idea” from the drop-down menu.

·      Enter either the Application Number or the PAN, complete the Captcha verification, and click on the Search Button to proceed.

 Alternatively, you can visit the website of Link Intime India Private Ltd for IPO status at https://linkintime.co.in/initial_offer/public-issues.html.

After the finalisation of the basis of allotment on April 23, selected investors will receive their allocated shares, while refunds will be initiated for investors not allotted shares. Successful bidders can expect the shares to be credited to their demat accounts by April 24.

Vodafone Idea FPO price band was fixed at ₹10-11 per share with a lot size of 1,298 shares, the offering comprised entirely fresh share sales up to 1,636 crore  equity shares by its promoters and other shareholders.

Before the FPO commenced, Vodafone Idea raised ₹5,400 crore from approximately 60 anchor investors, marking it as the third-largest anchor book following One 97 Communications and Life Insurance Corporation of India.

The capital raised will provide the struggling telecom operator with the resources to bolster its position in the Indian telecom market, where it currently lags behind larger competitors like Reliance Jio and Bharti Airtel by a significant margin.

Additionally, the funds will assist Vodafone Idea in fortifying its finances for the long-awaited 5G rollout, enhancing 4G services, and addressing vendor dues.

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Vodafone Idea CEO outlines subscriber retention strategies and more | Q&A

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Akshaya Moondra, CEO of Vodafone Idea, discussed in detail the company’s future plans with CNBC-TV18, including upcoming capital raising, capacity expansion, industry tariff hikes, average revenue per user targets, 5G rollout, among other things.

The telecom service provider has launched an ₹18,000 crore FPO and the anchor book boasts of some names such as Fidelity, GQG, UBS.

The FPO has also received support from the government, which is the largest shareholder in the telecom operator.

Below are the edited excerpts from the interview: 

Q: You have got some marquee investors on board, foreign and domestic investors. The question is what next now?

A: We are going to use this basically for growth capex. This is not the only funding we are doing. This is a part of the funding of ₹18,000. You’re aware ₹2,075 crore will come from promoters. And we are also in discussion with the lenders. And the way the funding is being raised is to have a total availability for growth capex which can meet our requirements for 4G coverage, expansion, 4G capacity growth and the 5G rollout. And when we do this, we are confident that we will be able to arrest the loss of subscribers and start participating in the growth of the industry which we have missed out for the last few years.

Q: So how soon before you will be able to close the bank funding of ₹25,000 crore?

A: We have been engaged with our lenders for quite some time. One of the asks was that the equity funding should happen first. And actually that task was for a lesser amount. So now that the funding is there, and should happen in the next few days, we will engage with the banks.

Q: So is three to six months a realistic assumption?

A: I am not at liberty to say, but we will do it as quickly as possible. And let’s say we have sufficient funding, and the bank funding should be available in time in my sense, so that our capex (capacity expansion) plans remain on track as per our plan.

Q: Talk to us about your capex plans, because that is the necessary input to arrest your subscriber decline. From the FPO proceeds, ₹12,750 crore is outlined for capex. Once you get the bank funding, and of the total capital raise of ₹45,000 crore approximately, how much goes into capex? If you could break that up in 4G and 5G.

A: I can’t give you specific guidance. But let’s start with the FPO proceeds. ₹12,750 is for capex; spectrum is about ₹2,000 crore. but we don’t need to buy much of a new spectrum. So the split of ₹12,750 crore is ₹5,720 for 5G rollout, and the remaining ₹7,000 crore is for 4G, roughly equally split between 4G coverage expansion and 4G capacity growth.

While we need to grow the 4G capacity, we need to roll out 5G. The reason why we lose subscribers disproportionately today is only because of lack of 4G coverage. And today, our share of new customer acquisitions is actually higher than our customer market share. So the only thing we need to arrest is the loss of subscribers, and which I am very confident that once we are able to plug this coverage gap.

Q: How many quarters do you think it will take before the subscriber decline comes to an end?

A:  I would say that 4G coverage expansion will happen very quickly because the vendors are ready with the equipment, the towers are already there and we just have to deploy equipment on existing towers. I cannot give you a timeline, but we are confident it should happen at great speed.

Also Read | Vodafone Idea FPO risk-reward favourable, say analysts — Should you subscribe to the ₹18,000 crore offer?

Q: On 5G, why are you only targeting achieve covering 40% of your revenue base in the next two to two and a half years when he appears already have a pan India rollout?

A: For 5G, that is our plan today, it could be modified. And you will have seen what has happened with 5G is that on the consumer side, there is not so much a 5G use case and monetisation has been a challenge.

Also, when you moved from 3G to 4G on your phone, you could see a very big experience difference. But with 5G, that is not the case. So, 5G is not a factor in operators competition, gaining a disproportionate market share right.

Q: Now the question of how and when on tariff hikes. Your ARPU (average revenue per user) is ₹145 per month. What is your own internal assessment? When can the first tariff hike take place, the quantum and the next one?

A: The Indian ARPUs are the lowest and I think lowest not by a small margin by but a big margin. So that is the important factor. The second thing to be kept in mind is that today, none of the players are returning their cost of capital. And it has not been just a year or so it has been five or six long years. And that was the scenario when 4G investments were made, 5G investments have added on to that. And 5G monetisation is still not to be seen. So the imperative for tariff correction just to get to a return on cost of capital being

Also Read | Vodafone Idea raises ₹5,400 crore from anchor investors for infrastructure expansion and 5G rollout

Q: What should the ARPUs be for you to be able to return your cost of capital?

A: I am not at liberty to say that, but there is enough commentary from our peers.

Q: Is it 300? That’s the commentary from your peers.

A: That number appears to be right.

Q: The Street is expecting that we will see a tariff hike post elections of a magnitude that we have seen in the past, which was 20%. Is this a fair assessment in your own mind?

A: I cannot say what would be the next price increase. But we have seen that this quantum of price increase is absorbed in the market without much of an implication. So I would say that the consumer at this level, is willing to accept.

For more, watch the accompanying video

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Before Vodafone Idea FPO, CEO says Indian ARPUs amongst lowest in the world

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vodafone Idea’s CEO Akshaya Moondra, in an exclusive interaction with CNBC-TV18 a day before the telco’s follow-on public offer (FPO) opens, rued that ARPUs, or average revenue per user, in India are amongst the lowest in the world, and by a huge margin.

According to Moondra, none of the telecom players are currently yielding returns on their cost of capital, given the existing ARPU levels.

“A tariff correction is imperative just to get a return on the cost of capital,”  Moondra said, adding the market could potentially absorb price increases similar to those observed in the past, around 20%, without significant repercussions.

The company’s ARPU was at ₹145 in the December quarter of FY24, up 7.5% year-on-year from ₹135 in the same third quarter of FY23. The CEO had said after the December quarter that the company had been able to increase its ARPU consecutively over the past 10 quarters.

When asked what the ARPU should be so that telcos can ensure a reasonable return on investment, Moondra said he is not at liberty to quote a number. Still, he said there is considerable commentary from industry peers on the matter and the figure of ₹300. “That number appears to be right,” he said.

Vodafone Idea has been consistently losing subscribers. According to data from the Telecom Regulatory Authority of India, Vodafone Idea lost 15.2 lakh subscribers in January. The management had earlier mentioned it has 215 million subscribers.

Moondra attributed the company’s disproportionate loss of subscribers to insufficient 4G coverage. Nevertheless, he conveyed optimism: “We expect 4G coverage expansion to happen very quickly. We want to improve our market share.”

Vodafone Idea Ltd.’s ₹18,000 crore follow-on public offer (FPO) opened for subscription on April 18. The company plans to allocate more than two-thirds or 70% of the funds raised towards capital expenditure to bolster its network infrastructure and expand its market presence.

Moondra told CNBC-TV18 that ₹5,720 crore of the total fundraising will be used in the 5G rollout. He added that the money raised would be enough to fund capex plans for the next three years.

The 4G investment of ₹7,000 crore will be “roughly equally split between 4G coverage expansion and 4G capacity growth.”

Vodafone Idea has fixed the FPO price band between ₹10 to ₹11. The stock has risen 113% over the last 12 months.

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Vodafone Idea to launch ₹18,000-20,000-crore FPO next week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vodafone Idea (VI) is gearing up to launch a follow-on public offer (FPO) to raise ₹18,000-20,000 crore by the middle of next week, sources have told Moneycontrol.

The debt-laden telecommunications company has enlisted Jefferies, SBI Caps and Axis Capital as lead managers for the FPO, the largest offerings of its kind in India. However, none of the banks are underwriting the issue, sources said.

Yes Bank’s ₹15,000 crore-FPO has been the largest such share sale in the Indian market, so far. Adani Enterprises ₹20,000-crore FPO in January 2023 would topped it but the Gautam Adani flagship company called off the offer after the Hindenburg Research report alleged several governance lapses at the Adani group.

Vodafone Idea has secured commitments from anchor investors, including both foreign and domestic institutional investors, sources said, signalling initial support for FPO.

Also Read: Vodafone Idea could fall to just ₹5 a share — that’d be a fall of over 60%

The fundraising has the backing of the government of India, which is the largest shareholder in the company at 33%, sources said, adding that some investors reached out to the government before committing to invest in the FPO. E-mails sent to Vi and SBI Capital remained unanswered, while Jefferies and Axis Capital declined to comment.

The move comes amid intense competition and financial challenges in
the telecom sector. Vodafone Idea has been grappling with a significant debt burden and operational losses, exacerbated by regulatory issues, resulting in a decline in its subscriber base and market share.

On April 5, Vodafone Idea’s board approved the allotment of shares worth Rs 2,075 crore to Oriana Investments Pte Ltd, an Aditya Birla Group entity and part of the promoter group, on a preferential basis.

The issue price is Rs 14.87, higher than the closing price of Rs 13.36 on the BSE on Friday. The proceeds from the offering are expected to provide much-needed liquidity and support to the company.

Also Read: Vodafone Idea gets shareholder nod for ₹20,000 crore fundraising plan

According to the Telecom Regulatory Authority of India’s (TRAI) data, Vodafone Idea’s subscriber base fell by 1 million to 220.5 million in February. The telco has been losing two to six million subscribers every quarter for the past few quarters due to the subscribers moving to other service providers. Vodafone Idea’s overall user base was 215.2 million on December 31.

Industry experts say the telco needs to urgently invest in infrastructure to improve the quality of service and retain subscribers.

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ATC Telecom tells Vodafone Idea to convert ₹1,440-crore worth OCDs into equity shares

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Telecom operator Vodafone Idea Ltd (VIL) on Tuesday, March 19, said ATC Telecom Infrastructure Private Ltd has requested the company to convert optionally convertible debentures (OCDs) amounting ₹1,440 crore into equity shares.

“We wish to inform you that in accordance with the terms of the OCDs, ATC has vide its notice dated 18 March 2024 requested for conversion of 14,400 (Fourteen Thousand and Four Hundred only) OCDs into 144,00,00,000 (One Hundred and Forty Four Crore) fully paid-up equity shares,” the company said in a stock exchange filing.

“The company will be taking necessary action to allot the above-mentioned Equity Shares to ATC pursuant to the conversion of the said OCDs,” Vodafone Idea said.

The move comes after Vodafone Idea had issued optionally convertible debentures amounting to ₹1,600 crore to ATC Telecom Infrastructure Private Ltd in February 2023 after receipt of approval from the shareholders and requisite intimation to stock exchanges. Further, in August 2023, the term of redemption of the first tranche of OCDs amounting to ₹800 crore was extended by 12 months.

ATC is one of the largest infrastructure service providers for Vodafone Idea and both entities have a long-term relationship. In the spirit of this partnership, ATC subscribed to OCDs amounting to ₹1,600 crore, proceeds of which were primarily utilised against payment of dues to ATC. The conversion price of ₹10, at the time of OCD issuance, was at a premium to the then prevailing market price of Vodafone Idea share, the company added.

Shares of Vodafone Idea Ltd ended at ₹12.86, down by ₹0.31, or 2.35%, on the BSE.

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Vodafone Idea shares rally 8% ahead of Feb 27 board meet to consider fund raising

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Vodafone Idea Ltd zoomed 8% to hit a day’s high of ₹17.65 in Friday’s opening trade after the telecom service provider said that its board will meet on February 27 to consider fund raising proposals. At around 9:40 am, the scrip was trading 7.67% higher at ₹17.55 apiece on NSE.

Proposals for fund raising could be considered via a rights issue, a further public offer, private placement including a preferential allotment, a QIP or any other permissible mode or a combination there off.

Options to raise funds via Global or American Depository Receipts, or bonds including foreign currency convertible bonds, convertible debentures, warrants are also on the anvil, the company said in an exchange filing.

Vodafone shares had closed over 6% higher on Thursday after the Aditya Birla Group Chairman Kumar Mangalam Birla said that they are on the look out for new investors for Vodafone Idea. Birla made these remarks at the launch of Grasim’s paints business. Birla made these remarks at the launch of Grasim’s paints business.

Tech view

On Friday, VIL shares was seen trading higher than the 5-, 10-, 20-, 30-, 100-, 150-day and 200-day simple moving averages (SMAs). The counter’s 14-day relative strength index (RSI) stood at 59.9, indicating the stock is neither oversold nor overbought.

The VIL stock has a one-year beta of 0.9, indicating low volatility,

Vodafone Idea Q3 update

Vodafone Idea disappointed the Street with its third quarter (Q3FY24) results. The telecom company recorded a net loss of ₹6,985.9 crore for the October-December period, narrowing 12.56% from ₹7,990 crore in the same period a year ago.

Following Vodafone Idea’s quarterly results, analysts at UBS had assigned a ‘Sell’ rating on the counter, with a target price of ₹11.5 per share. Nuvama had said that they would remain watchful of the capital-raise and ARPU trajectory. Vodafone Idea needs to ensure it does not fall too far behind its peers in the 5G rollout, the domestic brokerage house suggested, as it slashed its FY24 estimates for Vodafone Idea, mainly due to postponement of tariff hikes and lower subscriber addition due to lagging capex.

“Our FY26 estimates do not yet include spectrum dues repayment as the moratorium period ends. Our valuation too, does not include AGR dues,” Nuvama said while suggesting a target price of ₹7 on the counter.

For the month of December, Vodafone Idea lost 13.7 lakh users, compared to the 10.7 lakh it lost in November, according to the recent TRAI data.

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Reliance Jio adds 4 million wirelesss subscribers in December 2023, Airtel adds 1.85 million

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Reliance Jio Infocomm Limited (Jio) added 4.22 million subscribers (wired+wireless) in December 2023, taking its total subscriber base to 470.29 million, according to the latest subscriber data released by the Telecom Regulatory Authority of India (TRAI) on Thursday, February 22.

During the same period, Bharti Airtel (Airtel) added 2.41 million subscribers, taking its total to 264.76 million.

In the wireless subscriber space, Jio added nearly 4 million and Airtel 1.85 million, while Vodafone Idea lost nearly 1.37 million subscribers.

According to the TRAI data, Jio is the leading service provider (wired+wireless) with a 51.98% market share, with Airtel cornering 29.27% of the market. Vodafone Idea, with a 127.29 million subscriber base, accounts for 14.07% of the market share.

When it comes to states/regions, TRAI stated in its report that all states except Maharashtra, Jammu & Kashmir and West Bengal witnessed a growth in wireless subscribers. Maharashtra declined by 0.08%, J&K by 0.14%, and the Kolkata circle by 0.42%.

According to the TRAI report, the total number of telephone subscribers witnessed a rise from 1.18 billion in November 2023 to 1.19 billion by the end of December 2023, indicating a monthly growth rate of 0.39%. Specifically, TRAI stated, urban telephone subscriptions increased from 659.58 million to 662.56 million during the same period, while rural subscriptions also saw a rise from 526.15 million to 527.77 million. The monthly growth rates for urban and rural telephone subscriptions in December 2023 were 0.45% and 0.31%, respectively.

In the past 12 months, Reliance Jio has added a net total of about 37 million wireless subscribers, Airtel added 32.2 million and Vodafone Idea lost 20.67 million. Reliance Jio clocked its highest subscriber intake in the past 12 months in July 2023 at 3.9 million, while Vodafone Idea lost the most with nearly 3 million.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow