Future of Vi
After the news of KM Birla’s letter to Gov’t offering to hand over its 27 % stake in Vodafone Idea (Vi) to the government or a domestic entity.
its share price slips 26% in 2 days hitting a fresh 52-week low and lost over ₹ 2,700 crore in market cap.
Some facts about Vi :
Vi has debt more than trebled in the last four years to Rs 1.6 trillion as of the end of March 2021
Net Sales = Rs 9,607.6 changed by -18.27% and Net Profit Rs -7,022.8 changed by 39.68% compared to PY 2020.
Recently SC dismisses Vi claims of reconsideration of AGR computation, company owes of Rs 50,400 crore and has already paid Rs 7,854.37 crore.
“Remaining AGR dues are more than double the existing (and post-crash) market cap of ₹ 21,264 crore”.
Vodafone Idea's market share shrunk marginally to 24.58% month-on-month.
Vi has been granted permission from DOT, Ministry of Communications. The DoT has approved FDI worth Rs 18,000 crore in the company and cabinet approval is awaited.
But Vodafone already holds about 45 per cent stake in the company and if another Rs 15,000 crore, likely to come via FDI, is added, it will increase the limit significantly and that may be a problem as per FDI norms.
Possible way out for Vi :
- Combination/Merger of Vi and BSNL might be seen as a life saver for both and it will be a win-win for both companies and Vi has efficient tech and BSNL has a gov’t support on its side through this the competitiveness might go up in the industry.
- Another way out may be seen as Vi must bring other Indian domestic companies like Adani as Adaani seems more interested in countering Ambaani.
Recently we have seen that the both are actively entering in each other’s businesses, Vi can capitalize this opportunity.
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