Shares Down, Mass Resignations, Emergency Loans, What Is Going On With Vodafone Idea?

People began 2023 with new hopes, but the once-largest telecom operator Vodafone Idea (Vi) seems to be having difficulties. This year will see the completion of several changes in the telecom industry, and the long-struggling carrier Vodafone Idea has a lot to do to keep up with the trends.

The debt-ridden company Vodafone Idea has been in the news a lot lately for all the wrong reasons, including failure to pay its debts to tower companies and other billers, record subscriber losses, the government’s plan to buy a stake in the business, and now a report that employees are filing their papers with the organization.

Data from the Telecom Regulatory Authority of India (TRAI) show that Vodafone Idea continued to lose subscribers continuously for 12 consecutive months up until October 2022.

Insiders who bought 11 billion rupees’ worth of Vodafone Idea Limited’s stock at an average buy price of 13.30 during the previous 12 months may be hurt by the recent 6.4% decline in the stock. Insiders purchase with the hope that their investments would increase in value over time. Their aforesaid investment is now only worth 6.2 billion, which is not ideal given recent losses.

According to media sources, Vodafone Idea had asked local banks for at least Rs 70 billion in emergency financing, but they are hesitant to grant further loans.

Banks led by the State Bank of India were opposed to taking on more credit exposures to Vodafone Idea. According to an article, lenders were waiting for more information on the government’s ownership position in Vodafone Idea as well as for the company’s promoters to raise additional equity money.

With fundraising delays, the pending conversion of four years’ interest on the spectrum, and AGR (Adjusted Gross Revenue) payments into equity for the government, Vi’s financial dilemma has not been resolved.

To overcome its current financial crisis, the business needs to raise approximately Rs 25,000 crore. The promoters invested Rs 4,900 crore after the government revealed its rejuvenation plan.

Investors, according to the company, are ready to contribute the remaining Rs 20,000 crore, but only after the government has converted the Rs 16,130 crore in interest that has accrued as a result of the company’s four-year moratorium on paying its adjusted gross revenue and spectrum dues into equity.

Upon conversion, the promoters’ ownership would decrease from 74.99% to 50%, making the government the only largest shareholder in the corporation with a stake of about 33%. However, before it transforms the loan into equity, the government wants the promoters to invest money.

Vi financing is essential for both the 4G CAPEX and the 5G rollout, and delays could result in more share losses that would benefit RJio and Bharti, which will accelerate their 5G rollouts in 2023.

The report stated that Bharti Airtel and Jio dominate 77% of the market as a result of the drop in VI’s share and should continue to acquire market share. According to the analysis, Vi will benefit from the new telecom legislation.

According to the source, “Vi, which has a four-year embargo on paying government dues, could benefit from this regulation law, which could offer options for write-offs.”

Inflation-adjusted Average Revenue Per User (ARPU) for the telecom industry, according to CLSA, is still 17% below pre-Reliance Jio levels. It added that Jio’s IPO is an important event to follow.

Retailers affiliated with the company in select districts of Delhi-NCR have advertised that users who port to “Vi 5G” will receive one month’s recharge free to draw new subscribers. Even though the corporation has not yet formally launched 5G, this is the case.

“5G is currently undergoing extensive testing in Delhi. The firm has instructed us to provide 5G to the public,” a SIM card vendor for Vodafone Idea in Delhi-NCR said. He added that customers who switch from Jio and Airtel will receive a month’s worth of free recharges totaling Rs 299 as compensation.

The company will respond soon, the company spokeswoman said, adding that this is being evaluated internally.

Industry executives claim that the sales staff must accomplish goals for bringing on new users and keeping existing ones, and shops may utilize this tactic in some cases. Under the condition of anonymity, a telecom industry analyst said, “This is misleading and the company should urge its regional sales team not to adopt such methods and be open.”

Vodafone-Idea (Vi), the telecom company, was previously struggling financially and is now seeing a wave of employee exits, it appears that the company is struggling.

In the past several weeks, 20% of Vodafone-sales Idea’s force has left, according to Financial Express, which cited sources in the sector.

It is still unknown why these people left their jobs. No reports are indicating if salary-related or other problems contributed to the mass employee departure. Although the LinkedIn post indicates that the organization has more than 1,000 open opportunities, the quoted source earlier today said that there were 986 open vacancies.

At Vodafone-Idea, positions like Prepaid Marketing Specialist, Prepaid Marketing, Marketing Analytics, and more are available. When questioned about the widespread staff exodus, the corporation refused to confirm it and instead defended its structure by referring to “career progression prospects” and Vi’s expansion.

At Vodafone Idea, organizational staffing is at a very healthy level of 95% of projected roles. Our attrition is lower than some of our competitors and by market and industry trends, according to a Vi spokeswoman.

Over the past year, we have hired outstanding people from rival companies and a variety of other sources to bolster our team and get ready for our upcoming path of expansion in the digital era. The statement continued, we also continue to offer career progression opportunities to our employees and assist them in upskilling for leadership roles thanks to our extensive talent pool.

In the last four fiscal years, the number of permanent employees at Vodafone Idea has decreased by more than 35%, according to the report. According to the statement, the company has 8,760 permanent employees as of March 31, 2022, down from 13,520 in FY19.

Due to the combination of Vodafone India and Idea Cellular in FY19, there are now more employees. According to the report, the company had 9,174 and 11,486 permanent employees, respectively, in FY20 and FY21.

“We are incredibly proud of creating VIL as the best workplace for women, as well. Avtar & Seramount’s Best Companies for Women Study 2022 has named us as one of the “100 Best Companies for Women in India (BCWI)”. The company claimed that VIL is the only telecom service provider to be included in this coveted ranking.

The industry titan in telecom has also been dealing with financial difficulties for a while. This is thought to be one of the reasons why Jio and Airtel have already launched their 5G services in several Indian cities, whereas Vi is still unable to do so.

According to reports, Vodafone-Idea lost 38.1 million mobile subscribers in the 19 months leading up to October 2022. According to the data, Vi has approximately 245.62 million total mobile subscribers as of October’s end.

Vodafone Idea’s net loss climbed during the July through September quarter to Rs 7,595.5 crore. The company’s auditors contend that the company’s financial performance has hurt its capacity to generate the cash flows necessary to pay its liabilities when they become due.

As of the conclusion of the second quarter, Vi had a meager gross cash position of Rs 190 crore and a net debt of over Rs 2.2 lakh crore. The telco’s impending repayment of Rs 9,600 crore in debt by September 2023 may further restrict its ability to invest in capital expenditures, underscoring the requirement for an immediate and sizable capital increase.

edited and proofread by nikita sharma