In the backdrop of increasing competition from Reliance Jio Infocomm Ltd and the upcoming bidding for spectrum, Vodafone Group is planning for equity infusion of USD 3 billion (Rs. 20,100 crores) in the Indian market to reduce its debt, reports Economic Times (ET). Vodafone India’s standalone net debt for 2015-16 was about Rs. 81,500 crore.
“Vodafone will also review the timelines for Vodafone India’s initial public offering, wary of value erosion due to a tariff war unleashed by Jio,” said the report. The company, however, has not revealed the debt replacement plan. It confirmed that there will be no change in the IPO timetable.
The new investment makes it certain that the service provider will be an active bidder in the upcoming auction of 4G airwaves. Besides 4G, the company may buy 3G airwaves to clear the coverage gaps. Analysts speculate a spending of $2 billion on acquiring airwaves. The spectrum auction is set to begin on October 1.
The operators are expected to slash rates to prevent their subscribers from porting out to Jio, which may hurt their financials in the months ahead. Vodafone has 4 million mobile subscribers as of June 30, registering a market share of 19.3%, according to the Telecom Regulatory Authority of India. It has 4G spectrum in India’s 9 circles out of the total of 22 and currently operates in eight circles. It lags behind market leader Bharti Airtel and Reliance Jio.