Vodafone Idea shareholders gave the green light to a fundraise of Rs 20,000 crore on April 3, potentially paving the way for revenue opportunities for multinational telecom equipment vendors like Nokia and Ericsson.
Following the announcement, shares of the telecom operator surged over 2 percent to Rs 13.7 per share. However, despite this positive development, Vodafone Idea’s stock has declined by more than 13 percent since the beginning of the year.
The infusion of funds is expected to facilitate the expansion of Vodafone Idea’s 4G network and the rollout of 5G services. Analysts believe that these strategic initiatives could help the company enhance its competitiveness and provide a superior experience to its users.
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Nevertheless, analysts caution that the amount raised may not be sufficient to significantly alter the company’s market share or address its overall debt burden. Additionally, the approved fundraise represents only a portion of the initial Rs 45,000 crore planned by Vodafone Idea.
Ashwinder Sethi, a principal at Analysys Mason, highlighted the potential for vendors like Nokia, Ericsson, and Samsung to capitalize on Vodafone Idea’s fundraise. “This will present a good opportunity for the vendors, including Nokia, Ericsson, and Samsung, to secure contracts at a time when fresh deals with Airtel and Jio will be limited,” Sethi told Moneycontrol.
Nuvama Institutional Equities emphasized the urgent need for Vodafone Idea to invest in its network infrastructure. “Both Bharti and Jio have already rolled out 5G in 5,000-plus cities and towns, and there is an urgent need for VIL to incur capex for 5G rollout and to upgrade the 4G network. The company needs to improve both its operational and financial metrics to withstand competition,” the institution stated.
Currently serving more than 200 million subscribers, Vodafone Idea collaborates with Nokia, Ericsson, Huawei, and ZTE for its 4G network infrastructure. These partnerships underscore the telecom company’s efforts to enhance its technological capabilities and maintain competitiveness in the rapidly evolving telecom industry landscape.
Sources: moneycontrol.com
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