Vodafone plans $3.5 bn war chest to fight richest Asian
Thursday, January 24, 2019 IST
Vodafone Idea plans to raise as much as Rs 25,000 crore ($3.5 billion) via a rights offering to help India’s largest mobile-phone carrier fend off Asia’s richest man, who continues to roil the industry by providing 4G Internet at prices that would drive most carriers bankrupt in other countries.
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Vodafone Group will contribute as much as Rs 11,000 billion, while India’s Aditya Birla Group will pump in as much as Rs 7,250 billion, according to a statement on Wednesday.
The plan underscores how Indian carriers have yet to figure out how to compete against billionaire Mukesh Ambani’s Reliance Jio, which offers packages with enough data to watch 46 hours of YouTube videos for about $2 a month.
Vodafone Idea itself was formed last year after a couple of the industry’s biggest players merged to create an operator big enough to withstand Jio’s low prices.
“We expect the rights issue to get priced at a discount, given hyper competitiveness in the segment,” said Rohan Dhamija, head of South Asia and Middle East at consulting firm Analysys Mason. “Vodafone Idea will use the funds to make network investments in 4G and for warding off competition from Reliance Jio.”
Separately, Vodafone Idea is also planning to sell its 11.5 percent stake in Indus Towers Ltd., a cell-phone tower company it jointly owns with Bharti Infratel Ltd and Aditya Birla Telecom.
Jio stormed into the world’s second-largest phone market in 2016 by offering free wireless services for months. Today, the company has already signed up 280 million subscribers and turned profitable -- even bringing connectivity to remote Indian villages.
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