Debt-laden telecom company Vodafone Idea (VIL) has given a contract of Rs 30,000 crore to Nokia, Ericsson and Samsung for the supply of 4G and 5G network equipment. The company said that this contract is for three years. The company had earlier announced a capital expenditure of $ 6.6 billion or Rs 55,000 crore in three years. This deal is the first step in this direction. The company said in a statement that Vodafone Idea has made a big deal of about $ 3.6 billion (about Rs 30,000 crore) with Nokia, Ericsson and Samsung for the supply of network equipment over a period of three years.
What is the company’s target?
The statement said that the aim of this capital expenditure program is to increase the coverage of 4G population from 1.03 billion to 1.2 billion, launch 5G services in major markets and expand capacity in line with the growth of data. Supplies under these new long-term contracts will begin in the coming quarter. The statement said that expanding 4G service (coverage) to 1.2 billion Indians is the company’s top priority. Now the question here is whether this will save the sinking ship of the company? Because the fall in the company’s shares is not pointing towards this.
Stock down 20%
Let us tell you that when Vodafone and Idea merged, it had become the country’s largest telecom company. But now everyone knows its condition. The company’s shares are also in a similar condition, which fell by more than 20 percent in the last two trading sessions. Currently, the closing price of the company’s shares is around Rs 10.
Why did the decline occur?
The major reason for the recent fall in Vodafone-Idea shares is a decision of the Supreme Court. The company had filed a curative petition in the Supreme Court in the Adjusted Gross Revenue (AGR) case, but the Supreme Court refused to accept its plea. After this, Vodafone Idea will now have to pay the government dues of about Rs 70,300 crore. The company’s own estimate of AGR dues is about Rs 35,400 crore.
Vodafone Idea is already burdened with a huge debt. On the contrary, recently the company also issued its FPO so that it could raise some money to improve its financial condition. The result of this is that now the company has 63,05,98,03,922 (6,305 crore) shares in the market. The total market capitalization of the company is slightly more than the amount it owes to the government. This amount is Rs 71,304.75 crore.
What do the experts say?
Seeing these figures of the company, most of the market experts say that the company’s stock is currently going through a difficult phase. A report by Nomura India says that this is the worst phase of Vodafone Idea, which is now being left behind. However, other experts do not seem to agree on this. According to a report by Business Standard, while Nomura gives it a buy rating, Nuwama Institutional Equities gives it a hold, JM Financials gives it a sell and Goldman Sachs gives it an underperform rating.
