Amazon Can Invest Rs 20,000 Crore In Vodafone-Idea? Investors Cheer As Vodafone Stock Prices Increase On Speculations
After it was reported that the e-commerce giant Amazon is in the running to invest up to Rs 20,000 crore in the struggling telecom operator Vodafone Idea, its shares rose sharply.
In order to to pay down its debt and invest in its network after returning from the brink of bankruptcy following help from the government, the telecom operator was looking for investors to raise fresh capital.
A major chunk of its adjusted gross revenue due and interest payments was allowed by the company to be converted by the government.
Even as the sector has managed to substantially raise tariffs in the past three years, it is the persistent loss of subscribers that have weighed on the company.
Signs of Revival
The company showed signs of revival in the quarter ended March as it added more than 1 million new 4G subscribers while its consolidated operating profits grew 22 percent aided by recent tariff hikes.
As Amazon is the only major cloud services giant without a telecom partner, it might be interested to invest in Vodafone Idea. Notably, Vodafone Idea is the only telecom operator without investment from a major US tech company.
US tech giants Facebook, Google and Microsoft have invested in the top two telecom operators in the country – Reliance Jio Infocomm and Bharti Airtel in the past 2.5 years in order to strengthen their cloud offerings in India.
From the projected $4.5 billion in 2022, India’s public cloud market is expected to touch revenues of nearly $11 billion by 2025 according to the International Data Corporation report.
Investment to Breathe a New Life
While the Indian government is preparing to auction the fifth generation of telecom spectrum, the investment from Amazon will not only breathe new life in the company but will also enable it to compete with rivals Airtel and Jio at a time.
At 11:34 am, shares of Vodafone Idea were up nearly 4 percent at Rs 9.25 on the National Stock Exchange.