Garnering the third largest anchor allotment in the country, Vodafone Idea’s follow-on public offer hopes to attain full subscription come April 18. In an interview with businessline Vodafone CEO Akshay Moondra defined his plans to plug gaps in the company’s 4G network to place it back on the path of recovery. As the firm whips support from retail investors, top management continues their roadshows till the very last minute. Moondra, along with other senior executives, was in Gujarat speaking to investors on Tuesday. With an FPO which might turn the company’s fate around, Moondra looks to the future. Excerpts:

How have you kept your employees motivated for years when the company struggled to garner funds? 

I have been telling employees to not worry about results and keep doing your best even if you are not getting results. You derive part of the satisfaction by doing your best, and anticipating results will only hamper that pleasure. So I have tried to embody that belief amongst employees. Generally this has been the quality of strong parentage and strong promoters and the faith that the company will always survive. All of these certainly helped in keeping the morale up. 

When did this idea of FPO come into the picture? Was it a fallback as strategic investors and corporate investors refused to infuse funds in the company? 

We have been trying to raise funding post January 2022, when we exercised the option of converting debt to equity. It did not happen at that time and promoters infused ₹5,000 crore, hoping the government would exercise the equity conversion option and the fundraising will be complete. Unfortunately that did not happen at the time – which meant that fundraising could not happen. Equity conversion was pivotal to bring back discussions with investors and as soon as that came through, we started to engage with investors. Our intent was to raise external capital with some infusion from promoters. We never really prioritised a strategic investor – we have two strong promoters so we do not really have room for strategic investors. For external capital, the two options are QIP and FPO. An FPO allows you to take on a larger fund raise. Given the volatility in the price, QIP was becoming difficult as well.

With FPO starting tomorrow, as an investor if I ask, what has changed for Vodafone Idea?

In prior attempts, government’s seriousness of converting debt to equity prevented investors from coming on board. Now, when we started re-engaging after equity conversion, investors saw ten quarters of our performance after the government reforms package. Clearly in these quarters we have demonstrated gradually improving performance, and for meaningful improvement investments need to be made. When investors saw that we could improve our performance despite handicaps, with investments we possess the ability to catch up in the market because of our organisational ability. 

Are investors being promised a certain multiplier in returns?

I have not engaged in those discussions, but if you see investors are seeing the importance of the India market where there is manifold digital and telecom growth. They see the India telecom opportunity very clearly because the market structure needs three private operators. The population is still growing, every citizen of the country is a potential customer, the penetration of 4G at 64 per cent is still very low and ARPUs are low. India has a momentous digital journey ahead. The only concern the investors had is will the government support a three telecom market and the government has made it clear that it will. 

AGR and spectrum dues are the big elephant in the room, while you maintain there is ample time before they come up 18-24 months, You will be expected to furnish bank guarantees for spectrum payments in the next five months to the government, since they require bank guarantees before the moratorium elapses, what have you committed to investors here?

There have been internal discussions on the matter. We have to engage with the government on this matter. Either we get these bank guarantees from the banks, we have not spoken to banks about it yet. Second possibility is that we request the government to waive off the bank guarantee requirement. If it is waived for every player , there will not be a specific dispensation. Given that the government has not asked for bank guarantees in the last two auctions. Logically it should not be asked for previous auctions as well but those discussions with the government have not been initiated. 

Can you give us capex targets for 4G and 5G going forward?

We have a plan but I am not at liberty to discuss it now. We are looking at overall funding which is primarily meant for growth capex. Dues to vendors, banks, spectrum and AGR will be met by internal cash generation and the new funding in the form of equity and debt is meant for growth capex.

How important is 5G to the network strategy?

On 5G we will be calibrated in our approach. We haven’t lost out by being late we have the hindsight looking at the rollout of others. We can be calibrated in our planning. We cannot provide 5G, since a user with 5G phone needs to use the 5G phone at some point?

Do you think capex will be sufficient to stymie suscriber leaks?

If you look at our customer acquisition vis-a-vis our market share, it outpaces it. Which means that our acquisition of customers isn’t the issue. The issue arises in pockets where we don’t have 4G network, where 2G subscribers looking to upgrade their 4G opt for competitors. Our plan is to plug these gaps in seventeen priority circles, which will arrest subscriber loss

Published on April 17, 2024

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