Jio Effect: Vodafone Gets Rs 48,000cr Infusion

MUMBAI: In the largest foreign direct investment in the country since the Narendra Modi-led BJP government was voted in in 2014, Vodafone Plc, Europe's biggest mobile service provider, has infused $7.5 billion (Rs 47,700 crore) in its Indian arm, giving the company more ammunition to defend its turf in the world's second largest telecom market where competition has intensified with the entry of Reliance Jio.

Vodafone India, the No. 2 player with 200 million subscribers behind Airtel, will use the funds to ramp up its network and participate in the radio airwaves auction. The announcement came eight days ahead of the the biggest-ever spectrum auction and 17 days after the launch of Reliance Jio.

"This equity infusion will be used for right-sizing our spectrum portfolio, expansion of network and deployment of next-gen 4G and 5G technologies," said Sunil Sood, MD & CEO, Vodafone India.

Reliance Jio, controlled by billionaire Mukesh Ambani, has stormed the market with free calls and rock-bottom data tariffs, pressuring existing telecom operators to rethink their strategies to protect their market share. Vodafone India is expected to be the most aggressive bidder at the ensuing spectrum auction with analysts predicting that it could spend as much as Rs 16,300 crore on buying airwaves.


The new telecom war and the fresh equity injection in Vodafone India has raised speculation that the Newbury, England-based parent may delay taking its local arm public.

Declining to give a timeline for its debut in the primary market, the company's India management merely said that it "continues to prepare" for a potential listing. Analysts said that Vodafone has pushed the timeline further into the future on concerns over the local arm's valuations in the wake of Reliance Jio's disruptive pricing and its impact on the industry's business model. And so, the parent has injected funds in the interim period, they added.

Already, telecom stocks including Bharti Airtel and Idea Cellular, the No. 3 player, have taken a beating after Reliance Jio's entry. Vodafone Plc entered the country in 2007 by acquiring a 67% stake in Hutchison Essar for $10.9 billion and the latest fund infusion is its second biggest investment in India, which today is its third largest revenue generating market globally. So far, it has invested about Rs 1.15 lakh crore in India.

Vodafone India, said Sood, also plans to use the money it recently received from its parent to retire high-cost debt, which currently stands at Rs 34,500 crore and improve its quality of service.