VODAFONE- IDEA IS NOW VI - Vodafone and Idea can survive?

In this article, we will be talking about Vi Business, and How it will have to raise its capital in the future.

Now you might have got confused on what is this Vi?

If you would have heard its name before then that's great!

Vodafone Idea, about which retail investors were very enthusiastic. On 7th Sept's morning, they informed in a news briefing that they are going to rebrand Vodafone Idea as Vi. Vi here stands for We! means we are together. Now why this company rebranded itself and changed its name and what implications can the investors expect?

A while before, the news was whether Vodafone and Idea can survive?

cause of the Supreme Court judgment, the stocks went down suddenly but now it has climbed up again. There might be many misconceptions in your mind regarding Vodafone Idea. In this article, we will talk about the important aspects. I will keep this article short but it will be big on learning for all of you.

Let me inform you, the topics we are going to cover in this article.

1. We will be talking about the rebranding of Vodafone Idea to Vi, its implication on the investors. What has the company told about the rebranding and what can be expected out of it in the coming days.
2. Secondly, the company informed that it will be fundraising up to Rs 25000 crore. We will talk in detail on how the company can raise this fund and would it be enough to keep running the company operations?
3. Thirdly, we will be talking about the Supreme Court judgment after which Vodafone Idea's share prices went down heavily on the same day but Airtel's share price started going up on the same day. We will talk about the news that Amazon and another big US company will be investing in Vodafone Idea. The day this news came out, its share prices went up by 27%. Is that news true or just a rumor?

 Let's talk about these topics in detail and turn it into a good learning session. If you haven't subscribed to Wodsofficial's blog yet, subscribe to our blog for upcoming new interesting articles.

Let's start with the article!

First, What's the purpose of a company to bring two of its brands together and do a rebranding.

I will try to explain this with a small example.

Say if I run a The company, A and it sells the same product in the market but in order to sell the same product, I have two brands, one brand is A and another, B Some people are subscribed to A brand and another set of people with B brand.

Time to time I have to get their marketing, run their campaigns in order to reach both A's and B's, customers bring in new customers and try to make them go to either A or B. This whole process becomes very complicated plus it's expensive to run two brands. Other than this, there is always bifurcation between these two brands. The same was in the Idea Vodafone's case, Idea and Vodafone's two brands were running in the market. Vodafone and Idea people used to confused about which companies users are. The company's costing was high, in order to reduce this company rebranded it as Vi. Ravinder Thakkar, MD & CEO, it's a fresh start for the brand which will send a fresh message to subscribers, investors, and the market that Vodafone Idea are still very strong with their going concern. They want to revive Vodafone Idea and to establish itself in the market again. There are just two companies in the market now, Jio and Airtel, it can establish itself as a third company here.

Ravinder Thakkar mentioned this step is for a fresh start for the whole company which will spread a positive in the whole market that Vodafone Idea is very serious about its longevity will take every step to revive further.

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SOME INSIDER NEWS ABOUT VI.

Let me share more details about Vodafone Idea which can help you a lot in understanding its business and Ravindra Thakkar, CEO & MD of Vodafone Idea recently shared that he would not take his remuneration for the last 3 years from the company. You can understand from this on how serious Vodafone and Idea are about cost saving cause of which even its CEO won't be taking any remuneration from the company for three years this can be a positive thing for the investors, this can be one of the factors for your investment decision but investment decision is taken as a mixture of many factors.

The second important news coming from the CEO is that the company can increase its tariff in the future which means it can increase the charges for its data as well the calling service in the future. They have said that if the competitors are not considering to increase the tariff, it's fine. They will independently go ahead with this decision. In the Telecom sector, ARPU No. is very important. It stands for Average Revenue Per User. 

Vodafone Idea's ARPU is around 100. The highest ARPU is of Airtel at around Rs 157 and Reliance Jio's ARPU is around Rs 140. Vodafone Idea's management has said that in order to make this industry sustainable,  its target would be making its ARPU around Rs 300 to Rs 400. Only Vodafone and Idea are not enthusiastic about the price hike, Airtel CEO, Sunil Bharti Mittal also mentioned even he is thinking about how to increase the Tariff for the whole sector cause if we talk about the data cost is very less in comparison with the US and Europe, but they have cleared mentioned that they won't hike as much as in developed countries. But the tariff in India is so small that it will make it impossible for companies to survive in this market.

Friends, Now I will talk about Fundraising which is this article's second part.

Vodafone Idea is going to raise funds in the coming times if we talk about its Quantum they are planning to raise Rs 25,000 Cr which would be a mixture of both debt and equity it will raise enough funds to sustain its business.

Why is fundraising important here?

As you know about the AGR dues news before sometime Vodafone Idea had a liability of Rs 58,000 Cr which it had to pay to the Government but according to the Supreme Court judgment, they had to pay off the amount fast Cause of which Birla Group had said that if the Supreme Court is asking to pay right away there would be no another way but to liquidate for Vodafone Idea.

Now according to the update on the Supreme Court judgment, they have received a time window to pay off the cause of the debts of which the company is planning to raise a fund of Rs 25000 Cr,  after which they will pay off a certain amount of AGR dues will reinvest the rest of the amount in order to run the company again.

The update on the Supreme Court judgment is that the telecom companies, Airtel, Vodafone can take up to 10 years to clear the dues. If we add another thing here, the Supreme Court has added that before March 31st, 2021 every company will have to pay 10% of their dues, Let's take Idea's case here, they have a liability of Rs 50,000 Cr.

It's 10% is Rs 5000 Cr, the company will have to pay off its debt of that amount by 31st March 2021. If it is able to raise Rs 25000 Cr, it has enough money to pay off its first instalment but we don't know for how many years that amount would be enough for but Rs 25000 Cr is not enough to make their problems to go away for 5 to 10 years.

Yes, they can fix their problems in the short term but for the long term, they will have to raise funds.

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Let's talk about the news cause of which Vodafone Idea's shares went up by 27%.

In that news, it was mentioned that Amazon and another big US company are going to invest in this company and are about to buy a big stake. The share price started going up right after this news. But in the evening Vodafone Idea denied this fact and said that this news is not correct. Till now nothing of this sort has been materialized cause of which Vodafone Idea can file in the exchange that any company is going to do a big investment there.

If you are planning to invest on this basis then wait a bit longer, analyze it and decide whether you want to invest or not.

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