 "Sensex, Nifty, stock brokers")
Shares of Vodafone Idea (VIL) hit an over four-year high of Rs 18.42, as they surged 15 per cent on the BSE in Monday’s intra-day trade amid heavy volumes. The stock of telecom services provider surpassed its previous high of Rs 18.30 touched on April 1, 2019.
In the past two trading days, the stock has zoomed 39 per cent amid buzz that the company is likely to soon close its much delayed fundraise. According to a Business World report, Elon Musk would tie-up with VIL for his maiden entry into India's telecoms space.
Markets were also betting that the government would sell its 33.1 percent stake in VIL to Musk to enable Starlink to enter the Indian market. Musk is visiting India to attend the Vibrant Gujarat Business Summit between January 10 and 12, for a big land deal in the state for a mega factory for his auto company, the Business World reported.
However, on September 18, 2023, VIL had said the company is not in any such discussion with any of the parties including Verizon, Amazon, or Starlink. The said news item is incorrect. The company had given clarification on a news Item titled ”Vodafone Idea to be acquired by a US telecom giant soon? Verizon, Amazon, or Starlink, in the race.”
Meanwhile, speaking at a post-result analyst call after second quarter results were announced, VIL’s Chief Executive Akshaya Moondra had said the equity funding of about Rs 2,000 crore should close by the end of the third quarter (October-December) of FY24. Analysts believe the latest rise in share prices is in anticipation of this.
At 11:31 AM; VIL was quoting nearly 9 per cent higher at Rs 17.42, as compared to 0.01 per cent decline in the S&P BSE Sensex. The average trading volumes at the counter nearly doubled today. A combined 1,372 million equity shares representing 2.8 per cent of total equity of Vodafone Idea changed hands on the NSE and BSE.
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VIL has seen a consistent rise in average revenue per user (ARPU) owing to a high renewal rate and a shift to 4G. The management said the tariff rationalization on the higher usage plans and moving to a structure of paying more for using more remains critical to ensure the operators make reasonable returns on their massive network and spectrum investments.
The outlook of the telecom sector is expected to be stable supported by an increasing rural penetration, growth in broadband subscribers and roll-out of 5G services which will lead to improvement in ARPU. The government has also taken major reforms to improve the profitability of the telecom operators which will provide the requisite cash flows to support growth, according to CARE Ratings.
On November 1, CARE Ratings reaffirmed the ratings assigned to the bank facilities of VIL which factor in the experienced management team, pan-India telecom presence with high brand recognition supported by a stable outlook for the Indian telecommunications industry, stance of the promoter groups [i.e., the Aditya Birla group (ABG) and the Vodafone group Plc (VGP)] in assisting the entity and majority shareholding (33.14 per cent as on June 30, 2023) of the Government of India (GoI) through the Department of Investment and Public Asset Management (DIPAM).
The ‘Stable’ outlook reflects the expectation of continuous support from the promoter groups and infusion of funds by way of equity and long-term debt funds, which will provide liquidity support to VIL, implement 5G roll out to augment the subscriber base and improve revenue visibility, CARE Ratings said in rationale.
