New Delhi : The government’s acquisition of a 32% stake in Vodafone Idea, making it the largest shareholder in the country’s third-largest carrier, has alleviated bankruptcy concerns and received investor approval, as was reflected in the 20% surge in the company’s stock on Monday.
The government lifeline also allows the telco to raise funding, refinance bank debt, which would be used for paying up its dues to tower providers Indus Towers and American Tower Corp., and invest in 5G to compete with rivals Bharti Airtel and Reliance Jio.
Indicating changes are underway already, Vodafone Idea on Monday said it had partnered with Motorola to ensure the smartphone maker’s devices work on Vodafone Idea’s 5G network in Delhi, hinting at a possible 5G launch in the national capital.
“We believe this should provide a lifeline to IDEA as it should now be able to raise funds that will be critical for debt and vendor payments and also to invest in 4G and 5G capex," said analysts at JP Morgan in a note.