British telecommunications giant Vodafone Plc. injected Rs.47,700 crore or $7.1 billion into its Indian unit, Vodafone India, to fund its expansion plans and to ward off competition from the latest entrant, Reliance Jio, in the world’s second largest mobile market.
The equity infusion comes after Mukesh Ambani rolled out Reliance Jio services on September 1, Anil Ambani merged wireless business of Reliance Communications with Aircel to make third largest telco and a week ahead of the largest spectrum sale by the government.
This equity infusion via foreign direct investment (FDI) is largest ever FDI infusion in the country and “further manifests Vodafone’s increasing focus and commitment to India,” according to a statement form Vodafone.
“This equity infusion of Rs 47,700 crore, which we believe is the largest ever in India, will enable Vodafone India to continue its investments in spectrum and expansion of networks across various technology layers delivering the best of experience to our hundreds of million customers,” Sunil Sood, MD & CEO, Vodafone India, said in the statement.Spectrum sale
The government plans to earn more than Rs.5.6 lakh crore by selling airwaves in every band as operators gear up buy airwaves to offer high speed mobile Internet services.
Vodafone India has submitted Earnest Money Deposit (EMD) of Rs.2,740 crore, second highest after Reliance Jio at Rs.6,500 crore for the spectrum auction and may end up being the biggest spender in the auctions, according to analysts.
The EMD is indicative of a company's strategy to bid in specific circles and spectrum bands as it gives them eligibility points with regard to those circles.
Vodafone India, has been behind spectrum acquisition in India and the company has the worst portfolio of 4G spectrum among the top five telecom companies. Therefore, analysts said, the company is expected to splurge in the current spectrum bidding due to entry of Reliance Jio.
Leading telcos including Bharti Airtel, Vodafone India, Reliance Jio, Idea Cellular, Reliance Communications, Aircel and Tata Teleservices are participating in India’s biggest-ever telecom spectrum auction that will start from October 1, offering 2,300-plus MHz of airwaves across seven bands.
When asked about the proposed IPO, Mr.Sood said: “We have been given the go ahead for an IPO and we are preparing for it.” Till now, Vodafone has invested a total of Rs 1,15,500 crore in the country since 2007 and has 1,37,000 sites.