Vodafone Idea, the telecom major, has been in news for the past few months regarding the financial mess they are in. Recently they launched a new brand identity ‘Vi’ as well. The Supreme Court’s direction to pay the Adjusted Gross Revenue (AGR) dues towards the Department of Telecommunications has led to a situation where the company owes around 50,000 cr. Rs. in AGR dues. But recently the company made certain announcements which brought cheer to their shareholders.
One of the major developments in the company’s approval of a fund-raising plan worth Rs 25,000 crore through share sale and debt. The company in its board meeting approved raising Rs. 15.000 crore through issue of equity shares or securities convertible into equity shares, global depository receipts, American depository receipts, foreign currency convertible bonds, or a combination thereof by way of a public issue, preferential allotment, or through any other permissible mode in one or two trances. This led to a rally into the company’s share of up to 10%. The company’s share rose to 13.21Rs apiece on account of the announcement. A similar rally was seen a week before on reports of investment by Amazon and Verizon, but later Vodafone dismissed any such claims and clarified saying, “As part of corporate strategy, the company constantly evaluates various opportunities for enhancing the stakeholders’ value”. The company has also agreed to raise around 15,000 crores Rs. in one or more tranches by the issuance of unsecured and/or secured, non-convertible debentures.
The developments in the last few days have pumped in fresh optimism into the company but Analysts are still cautious and have noted that Vodafone Idea remains in a tricky situation. Despite the relief by the Honorable Supreme Court on account of payment of AGR dues, wherein it granted a 10-year period to pay off the dues, the company continues to be amidst a bleak future. The company demands a combination of a quick, sharp improvement in pricing, competitive network spends to control the market share erosion.
The company has to take some serious considerations regarding the future direction of the company when it meets on 30th September 2020 for its 25th Annual General Meeting.
