पत्रिका जगत Positive Journalism
Jaipur 10th April 2019: Vodafone Idea Ltd., the leading mobile telecommunications provider that covers 90.7% of Indian population, will open on 10th April its rights issue sized at approximately around Rs. 25,000 crore – the largest ever in the history of corporate India and its telecom sector. The Rights Issue of Vodafone Idea comprises 1,999.98 crore equity shares of face value of Rs. 10 each for cash a Price of Rs. 12.50 (Net Asset Value expected to Rs. 31.16 post Rights Issue) aggregating to Rs. 24,997.9 crore to eligible equity shareholders on a rights basis in the ratio of 87 rights equity shares for every 38 equity shares held by them on the record date (Record date – 2nd April). The Rights Issue will open on 10th April and will close on 24th April 2019. Out of the Rights Issue proceeds, Rs. 18,674.79 crore will be utilized for payment of certain deferred payment liabilities to the DoT and repayment of certain borrowings (including interest) and Rs. 6,220 crore towards general corporate purposes.
The Promoter shareholders – Vodafone Group (one of the world’s largest telecommunications groups) and Aditya Birla Group (one of India’s largest conglomerates with operations in 34 countries) – confirmed their participation of up to Rs. 11,000 crore and up to Rs. 7,250 crore respectively; in excess of their combined current entitlement. Furthermore, certain Promoter shareholders have also indicated that, in case the rights issue is undersubscribed, they reserve the right to subscribe to part or whole amount. The Promoters have committed to increase their stake to over 73%, if needed.
The cumulative fresh capex deployment in FY19 & FY20 is Rs. 27,000 crore and Rs. 6,200 crore has been earmarked for reuse of co-located equipment. The overall capex in FY19 and FY20 will be Rs. 33,200 crore. Investments are focused on profitable districts. Scale of procurement post merger results in better pricing and credit terms. The primary business focus is now on integrating operations and leverage synergies between Company’s and Vodafone India’s businesses to reduce operating expenditure, prioritize investments in profitable areas and increase ARPU and revenue. As the Company consolidates network and spectrum and improves coverage and capacities, specifically on 4G technology, it will be in a position to offer a better customer experience, which will assist in retaining existing customers and attracting new 4G customers.
Vodafone Idea is progressing well on its stated strategy post-merger. The key initiatives by the Company include strengthening Balance Sheet. Fibre monetisation is being actively explored as an option to increase financial flexibility and exploring significant acceleration of synergies. Indus Towers 11.15% sale proceeds comprise Rs. 5000 crore (US$0.7bn) for cash at completion and Initiatives for ARPU improvement. With the accelerated integration of two businesses, the Company announced in November 2018 that the guided cost synergies would be achieved by FY2021, two years ahead of the initial target set at the time of the original merger announcement in March 2017. The outcome of exhaustive planning is a well-defined five-pillar strategy: 1. Accelerating the integration; 2. Prioritize investments; 3. Drive ARPU through simplification; 4. Focus on fast-growing revenue streams and partnership approach to drive value; and 5. To strengthen the balance sheet.
Vodafone Idea is focused on certain key districts across Service Areas from where it derives a significant portion of revenue and profits, for any incremental investments. “We have segregated districts in India based on their growth potential and revenue and EBITDA contribution to our Company, instead of following a conventional approach and focusing on Service Areas. On the basis of such analysis, we have identified certain high potential districts which account for a large portion of our revenues and EBITDA and we are in the process of building large 4G coverage and capacity in such districts. We believe that our focused approach in these districts will help us optimise our capital expenditure and enable us to offer a superior customer experience,” says Balesh Sharma, CEO, Vodafone Idea Ltd. He said, “In Q3FY19, Idea’s 4G base stations went up from 80,000 to 104,000 and for Vodafone went up from 84,000 to 114,000 with only Rs. 1,100 crore capex in the quarter. That is very clearly because of being able to utilize the investments made by one brand on to creating coverage and capacity for the other. That is beginning to bear fruits; we will, therefore, need minimal investment in the coverage layer. We will be able to reuse the equipment from one of the two brands to create coverage for the other one.”
Akshaya Moondra, CFO, Vodafone Idea Ltd., said, “Most of the investments will go in capacity. As we said the coverage layer is largely provided for. But we also said that we are planning to get the capacity to 2.5x by March 2020. And this would require investments in TDD, in MIMO, in small cells. We will need to make investments in fiber, and whatever is required to supplement these sites. In the end, we also want to migrate some 900 MHz to LTE to provide better in-wall coverage and better penetration, which is quite important from a VoLTE perspective in the long run. As we have merged, we have got more 900 MHz spectrum.”
Vodafone Idea has the largest spectrum portfolio, large network investments in the form of network sites and optical fiber, wide distribution reach and customer affinity for its two strong brands – Vodafone and Idea. And thus, is very well positioned to be successful in the new operating paradigm in the marketplace. The Company had a Revenue Market Share of approximately 32% of the Indian mobile telecommunications services industry (excluding wireline revenue for Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited) for the quarter ended December 31, 2018 (as reported by TRAI).
Vodafone Idea had a Revenue Market Share of approximately 32% of the Indian mobile telecommunications services industry (excluding wireline revenue for Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited) for the quarter ended December 31, 2018 (as reported by TRAI). It had 387.2 million subscribers as of December 31, 2018. It had 391 million visitor location register (“VLR”) subscribers and VLR subscriber market share as of December 31, 2018 was 38% (as reported by TRAI). For the quarter ended December 31, 2018, it carried approximately 712 billion voice minutes and approximately 2,705 billion MB of data volume. As of December 31, 2018, its broadband network is spread across approximately 270,000 towns and villages and covers approximately 68.8% of the Indian population. As of December 31, 2018, its sales network comprised approximately 28,000 distributors servicing approximately 1.35 million third-party retailers for our voice and data services, resulting in 155 serviced outlets per 100,000 persons in the population it covers.
