Vodafone Plans Rs 25,000 Crore War Chest to Fight Mukesh Ambani
Vodafone Group Plc will contribute as much as 11,000 crore rupees Vodafone Idea was formed after a couple of biggest players merged Jio stormed into the world's second-largest phone market in 2016
Vodafone Idea Ltd. plans to raise as much as 25,000 crore rupees via a rights offering to help country'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.
Vodafone Group Plc will contribute as much as 11,000 crore rupees, while Aditya Birla Group will pump in as much as 7,250 crore rupees, according to a statement on Wednesday.
The plan underscores how domestic carriers have yet to figure out how to compete against billionaire Mukesh Ambani's Reliance Jio Infocomm Ltd., 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 per cent 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 28 crore subscribers and turned profitable -- even bringing connectivity to remote villages.