The under-debt Vodafone Idea, a joint venture between Britain's Vodafone Group Plc and India's Idea Cellular, which was in talks with various big names to help tide over its financial crisis, is said to have found a saviour in Verizon Communications and Amazon.com Inc.
According to multiple reports in Indian news media, Verizon Communications and Amazon may invest more than $4 billion for a stake in Vodafone Idea following a court-handed respite for the Indian telecom firm for settlement of dues to the government.
Vodafone Idea is in desperate need of cash to ward off the crisis on two fronts. One, to pay off the government dues. Two, to upgrade its network to take on the challenge posed by the rampant Jio Platforms.
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Vodaofne Idea in financial strife
Vodafone Idea was more or less caught in a vicious vortex. It began talking to potential stake-buyers to meet its financial challenges. But the same crisis and the resultant court case kept off all possible investors.
Vodafone Idea had to pay around Rs 50,400 crore to the government in licence fee, spectrum usage charges, interest and penalties. It has thus far paid Rs 7,854 crore.
It has posted a loss of Rs 25,460 crore in the June quarter due to one-time charges, including provisions to cover payments due to the government.
This week, however, the Indian Supreme Court gave the telecom firms a window of 10 years to pay off their dues to the government.
The ruling certainly has given Vodafone Idea some breathing space, and it quickly seems to have resumed stake-sale talks that it had put on hold with companies like Amazon and Verizon.
Vodafone Idea in talk mode
Vodafone Idea has been looking for a bail out deal and has been looking for suitable buyers. It was reportedly in talks with Amazon and Verizon, and the court verdict has given it the impetus to revive the talks that had run into dead-end.
Amazon has a significant presence in India, though not in telecom. Verizon, as it happened, had combined with Vodafone Idea rival Airtel a few years back. That alliance is long dead.
A few months back, it was also speculated that Google was planning to invest in Vodafone Idea. Now that looks impossible as Google has joined forces with Jio Platforms.
Vodafone Idea said that its board will meet tomorrow (September 4) to discuss proposals for fundraising.
Source: Mint.
