Verizon, Amazon and Starlink were named in latest media speculation
Vodafone group’s struggling Indian subsidiary, Vi (Vodafone Idea as was) has denied media speculation that a US giant was about to acquire a majority share in the firm. Verizon, Amazon and Starlink were named in a local media report.
The debt-laden Vi’s share price has risen 20% in two weeks, after it was reported that Vi is close to securing equity funding which has been in the pipeline for some time, since it started touting its business plan round banks in February.
Similar rumours about Verizon and Amazon have been circulating since 2020. Also, suggestions that Google was looking to buy a 5% share in Vodafone Idea and Amazon was in talks to buy a stake in Bharti Airtel. KKR and Brookfield Asset Management were also rumoured to be interested in investing in the Indian market back then. A month ago, have also been rumours that the Indian government might end up owning 70% of the p
Little bit of background
Vi was created from merging Vodafone and Idea which was announced in March 2017 and completed at the end of August 2018. They had little option but to consolidate after the huge and rapid success of Jio Reliance, which launched its 4G-only service in 2016. Vodafone Idea was jointly controlled by Vodafone (42.5%) and the Aditya Birla Group (26%), and had almost 408 million customers.
It had nett debt of €13.2 billion, 80% of which was owed to the government in taxes, interest and fines, most of which the operator contested in a long and complex legal argument involving the country’s Ministry of Communications, the Supreme Court and the regulator. In the end, Vi ceded 33.1% ownership to the Indian government in lieu of some debt.
PGURUS reports that, according to “top officials in the telecom sector”, the US giant is to invest more than $4 billion in Vi, acquiring some of Birla Group’s shares and most of Vodafone’s. the Indian government will sell its entire holding of 33% to the “giant” to gain a 51% holding. All told, the investment would ultimately add up to $10 billion, apparently.
Not out of the question
It will be interesting to see if there is any truth in any of the latest round of speculation. In June US President Biden and India’s President Narendra Modi pledged a vision of the US and India as close partners henceforth when President Modi visited the US. The two leaders looked to tighten this bond when President Biden attended the recent G20 Summit in New Delhi last week. In a joint statement, the two stressed the importance of supporting the Quad – that is, the diplomatic partnership between Australia, India, Japan and the US.
India under Modi sees itself as the fulcrum between China and the US in a new world order, according to some commentators, such as Bloomberg. Stronger economic ties would be a logical progression.
Ouch
Vodafone Group has lost tens of billions of euros from its disastrous entry into the Indian marketin 2007, via a subsidiary in the Netherlands. On the other hand, Vodafone made $130 billion from selling its 45% stake in Verizon Wireless in September 2013.
That was its high point – it’s been downhill all the way ever since, losing about £40 billion off its share price in the last five years. Now Vodafone’s market cap is £21.53 billion and Verizon’s is $141.5 billion (£114.27) billion. It would be ironic indeed if Verizon invested in India as the sub-continent’s ties to the UK fade.