Vodafone may pump in $3 bn into Indian unit

UK-based telecom giant Vodafone is planning to pump in $3 billion equity in its Indian unit to replace debt as competition further intensifies with the entry of Reliance Jio in the market.

According to people familiar with the development, the market conditions in India are such which gives more returns on equity, and that is the reason Vodafone is looking at equity infusion. Also it will cut the debt servicing costs, the people said.

The net debt for Vodafone India standalone for FY16 stood at around Rs 815 billion.

Vodafone is one of the largest foreign investors in India. The country’s second largest mobile operator, investors feel, is also likely to bid aggressively in the upcoming auction. The company will try to strengthen its position in the 4G market by acquiring spectrum.

 

Vodafone has 4G airwaves in just nine circles, which is far behind the spectrum footprint of market leader Bharti Airtel and Reliance Jio. Jio has got pan-India 4G spectrum whereas Airtel too will be a pan-India player as it has acquired 4G airwaves from Aircel and Videocon.

The next round of growth for telecom companies will come from 4G market especially after Jio has announced its commercial launch. The entry of Mukesh Ambani firm has already unleashed a price was in the market and most of the incumbent telcos have reduced data tariffs to take on the competition head-on.