Vodafone Group Plc (NASDAQ:VOD) Idea To Receive Rs 25,000 Crore Capital Infusion
Vodafone Group Plc (NASDAQ:VOD) closed the day at $17.93 and has been falling since past few days.
Vodafone Group Plc (NASDAQ:VOD) Idea is expecting a capital infusion of around Rs 25,000 crore by the end of April. The move comes amid plans that the company expects to kick off the sale of their stake in the resulting entity of the merger between Bharti infratel and Indus Towers at the beginning of the next quarter. The telecommunications giant is gearing up to take on Reliance Jio as well as Bharti Airtel in the market.
Freeing up funds for expansion of 4G
Vodafone CEO Balesh Sharma and Akshaya Moondra the CFO during the recent earning call told analysts that the company is already initiated the process of talking to investors over their fiber network.
The company expects to deleverage so that they can free funds to invest in the expansion of their 4G network and be at per with Jio and Airtel. In the next five quarters the company has planned that they will spend close to Rs 20,000 crore which is more than what they spent in the last quarter.
Vodafone has projected a healthy growth in subscribers in the current quarter and the April to June quarter owing to their high pricing of minimum recharge plans before they stabilize. In the last quarter, the company lost over 35 million subscribers leaving it with a partly 387.2 million subscribers.
User revenue grew
Analysts indicated that the company executives stated that their base model was doing well regardless of losing subscribers. The average revenue lost in that quarter was less than RS 20. However, the company’s revenue per user increased for the first time to Rs 89 in the third quarter.
Following the company’s approval of the Rs 25, 000 crore capital infusion in January the company saw its stock surge 11% and on Thursday after hours of trading, the stock gained 8.2%. According to Goldman Sachs, revenue will grow 1% in the current quarter but it could stagnate because of an increase in tariffs.
The funding requirement will be in the region of Rs 40,000 to 50,000crore by FY2021in the context of the Rs 25,000 crore market capitalization.
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