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Vodafone brings in FDI of INR 47,700 cr to battle out Jio

Published: Sep 23, 2016

By TIOLCORP News Service

NEW DELHI, SEPT 23, 2016: THE launch of Jio has triggered a full-fledged war in the telecom sector. Companies are pumping in funds overnight under the head of CAPEX to prepare battle out the cut-throat competition of Jio. VodafoneGroup Plc pumped a record Rs 47,700 crore of overseas investment into its Indian operation, slashing the unit's debt by half, priming it for the upcoming spectrum auction and ensuring battle-readiness in the fight for market share as Reliance Jio Infocomm enters the fray.  

The capital infusion, which involves converting loans to shares in the first half of the fiscal in the country's second-biggest phone company, will enable Vodafone India to continue its investments in spectrum and expansion of networks across various technology layers. This is the largest foreign direct investment (FDI) in India in rupee terms, exceeding BP's $7.2-billion purchase of a stake in Reliance Industries  

The infusion brings the company's net debt down to Rs 34,300 crore and cuts the debt to equity ratio by half. At the end of the last financial year, this stood at Rs 81,500 crore, leaving little free cash.  

The mobile phone operator has 4G spectrum in nine of the country's 22 circles, with operations in eight, lagging behind Jio and market leader Bharti Airtel's pan-India holdings. India is set to sell spectrum, valued at Rs 5.6 lakh crore at the reserve price, including airwaves in the 4G and 3G bands. Besides 4G, analysts said Vodafone may buy 3G airwaves to plug coverage gaps.  

Vodafone has invested Rs 1.15 lakh crore in India since 2007. The company's global management recently acknowledged at a conference that Vodafone India needed to strengthen its 4G holdings to be competitive, said a person aware of the matter.  

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