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Rumours suggesting that Vodafone and JV partner Aditya Birla Group would inject around $350 million in the beleaguered telco have been categorically denied
A report from the Economic Times (ET) recently caused a stir when it suggested that Vodafone Group was looking to breathe life back into its Indian JV, Vodafone Idea with a significant investment.
The Indian operator has been struggling under the financial pressure of AGR dues the company owes to the government – a debt so large that the company could see itself go under. Idea, alongside rival and fellow AGR sufferer Bharti Airtel, have petitioned the government for relief multiple times to no avail, their latest plea rejected by the Supreme Court back in March.
In the past, Vodafone Group has been adamant that it would not sink more funding into Idea to alleviate the situation, which is why it came as quite a shock to hear two anonymous sources reported in the ET suggesting that the company was looking to inject between $200 million and $225 million into the Indian JV.
Partner in the JV, Aditya Birla Group, was also pegged to be investing $125–$150 million.
Despite the ET’s report containing official statements from both Vodafone and Aditya Birla Group denying that they would be investing new funds into the company, Idea’s share prices rose 10% following the report.
However, further questioning has seen Vodafone insist that the rumours are not credible and that the it had no intention of putting fresh equity into the company.
The confusion seems to have arisen as a result of a $1.2 billion fund that was set aside for historical liabilities when the original shareholder agreement for the JV was signed back in 2017. As of November 2019, this fund has reportedly not been touched, and it may be here that we find the source of the reported millions waiting to be invested.
A cash injection of this size would go some way to propping up the operator, perhaps keeping it viable for a couple more years, but ultimately the company’s fate still lies in the hands of the Supreme Court, whose decision to grant and deny relief for the stricken company could mean life or death.
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