Vodafone group has made an expedited payment of $200 million to its Indian subsidiary, Vodafone Idea, sending shares in the beleaguered joint venture soaring.
Vodafone Idea became India’s biggest telco when its two constituent partners, Vodafone India and Idea Cellular, merged in August 2018. However, it has haemorrhaged subscribers since then and has relinquished the crown of India’s biggest telco to Reliance Jio this year. Vodafone Idea’s share price has plummeted since then, falling from 29.81 rupees on the 31st August 2018 to just 3.05 rupees per share on the 1st of April 2020.
However, Vodafone Group’s decision to provide an additional $200 million of cash to the ailing telco has seen its share price rally to 4.30 rupees per share since the announcement was made yesterday.
"Vodafone Group has accelerated this payment to provide Vodafone Idea with liquidity to manage its operations, and to support the approximately 300 million Indian citizens who are Vodafone Idea customers as well as the thousands of Vodafone Idea employees during this phase of emergency health measures, taken as a result of the COVID-19 pandemic," Vodafone Group said in a statement to the media.
Vodafone Idea could yet receive an additional $100 million from its other JV parent, Birla Group, according to reports in the press. Birla Group has not yet commented on whether it will put more money into Vodafone Idea.
Vodafone Idea is struggling under the weight of almost $7.6 billion (58254 crore rupees) of debt, a significant portion of which relates to the Supreme Court’s 2019 ruling that Indian telcos must recalculate the way in which they calculate their adjusted growth revenues (AGR) – a crucial metric that the Indian government uses to calculate dues on spectrum licences.