Vodafone Idea’s shares experienced a significant 10% surge during Wednesday’s trading session due to reports of a planned equity infusion of Rs 14,000 crore. According to media sources, this investment entails the Aditya Birla group and Vodafone group contributing Rs 2,000 crore as fresh equity into the telecom company. Previously, the promoters had injected Rs 5,000 crore as fresh equity following the government’s revival package in 2021. Now, Vodafone Idea aims to raise an additional Rs 7,000 crore from external investors, either through direct equity or the issuance of convertible instruments.
This news caused Vodafone Idea’s share price to reach a peak of Rs 8.48 during intraday trading on the BSE. However, the stock retraced some of its gains and closed at Rs 7.92, representing a 2.72% increase over the previous closing price.
On Wednesday, more than 8 crore shares were traded on the exchange, surpassing the two-week average of 3.21 crore shares. Currently, the company holds a market capitalization of Rs 38,554 crore.
While its competitors have been strengthening their 5G infrastructure, Vodafone Idea has fallen behind, resulting in a consistent loss of subscribers. According to analysts at Goldman Sachs, the telco has been losing 1 million subscribers per month in recent months. Although the rate of loss has improved, the absence of near-term 5G rollouts and the company’s inability to expand its 4G network coverage may lead to an accelerated decline in market share if tariff hikes do not occur until the second half of 2024.
Merger with Three
In a separate development, two major mobile phone operators in the UK announced their merger plans to leverage the opportunities presented by the rollout of next-generation 5G wireless technology in the country. Vodafone UK and Three, owned by Hong Kong’s CK Hutchison, have agreed to combine their businesses, forming the largest mobile phone player in Britain with a market value of approximately £15 billion ($18.75 billion). Vodafone will hold a 51% stake in the merged company, while CK Hutchison will own the remaining shares.
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