Vodafone Idea shareholders approve fundraise of Rs 20,000 crore

Vodafone Idea shareholders approved fund raise of Rs 20,000 crore on April 3, which could potentially unlock revenue opportunities for multinational telecom gear vendors such as Nokia and Ericsson.

Shares of this telecom operator surged over 2 percent to Rs 13.7 per share after the news. So far this year, the stock of Vodafone Idea has declined more than 13 percent.

Follow our live blog for all the market action

The funds will allow the telecom major to expand its 4G network and rollout 5G services. Analysts suggest that these moves could help the company regain some of its competitive edge by offering a better experience to its users.

However, they said the fundraise is too small to have a meaningful impact on the company's market share and its overall debt position. Furthermore, the board has approved only a part of the initial amount of Rs 45,000 crore planned by the company.

“This will present a good opportunity for the vendors, including Nokia, Ericsson and Samsung, to get contracts at a time when fresh deals with Airtel and Jio will be limited,” Ashwinder Sethi, principal at Analysys Mason, told Moneycontrol.

Nuvama Institutional Equities said, “Both Bharti and Jio have already rolled out 5G in 5,000-plus cities and towns, and there is an urgent need for VIL to incur capex for 5G rollout and to upgrade the 4G network. The company needs to improve both its operational and financial metrics, to withstand competition.”

With more than 200 million subscribers, Vodafone Idea currently works with Nokia, Ericsson, Huawei and ZTE for its 4G network.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.