InvestorQ : What was the outcome of the Vodafone board meeting on 07 September?
Dawn Cherian made post

What was the outcome of the Vodafone board meeting on 07 September?

Answer
user profile image
Mitali Bhutta answered.
2 weeks ago


Vodafone Idea becomes Vi; and that is the brand under which the service will now be offered but that was more of the cosmetic part of the entire deal. There was a lot more of dough that was announced by the company as part of the board meeting.

Firstly, Vodafone Idea or Vi has sent out a very strong signal that bankruptcy is no longer an option for the company and that should give the requisite comfort for the investors. It has clarified that it is going to remain in the Indian telecom business for the long haul.

The launch of Vi, as an integrated brand, will mark the consolidation of business brands of two highly powerful and popular brands in the telecom space. However, the management has been silent on whether the promoters will participate in the Rs.25,000 crore dilution.

Vodafone had a net worth of just Rs.9000 crore as of March and with the June quarter losses at Rs.25,400 crore, its net worth is already negative. The company needs to urgently ramp up its net worth via issue of fresh equity. But dilution will be the big challenge.

Vodafone Idea has got a life line in the sense that it can pay the AGR dues over a period of next 10 years. It has a total outstanding of Rs.57,500 crore of which Rs.50,000 crore is still pending. That is a huge number to be paid.

Currently, Vodafone has a 44.39% while the Aditya Birla Group holds 27.66%. The two companies have equal representation on the board but have yet not committed anything on fund infusion.