Shares of Vodafone Idea rose sharply on May 30 after The Ken reported that e-commerce giant Amazon is in the running to invest up to Rs 20,000 crore in the struggling telecom operator. Moneycontrol could not independently verify the report.
Vodafone Idea has been in the search for investors to raise fresh capital to pay down its debt and invest in its network after returning from the brink of bankruptcy following help from the government.
The company had allowed the government to convert a major chunk of its adjusted gross revenue due and interest payments into equity. However, persistent loss of subscribers have weighed on the company even as the sector has managed to substantially raise tariffs in the past three years.
In the quarter ended March, the company showed signs of revival as it added more than 1 million new 4G subscribers while its consolidated operating profits grew 22 percent aided by recent tariff hikes.
As per The Ken, Amazon may be interested in investing in Vodafone Idea as it remains the only major cloud services giant without a telecom partner while Vodafone Idea is the only telecom operator without investment from a major US tech company.
Over the past two and a half years, US tech giants Facebook, Google and Microsoft have invested in the top two telecom operators in the country – Reliance Jio Infocomm and Bharti Airtel to strengthen their cloud offerings in India.
According to a International Data Corporation report, India’s public cloud market is expected to touch revenues of nearly $11 billion by 2025 from $4.5 billion projected for 2022.
For Vodafone Idea, 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 when the Indian government is preparing to auction the fifth generation of telecom spectrum.
Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.