Verizon, Amazon eye $4 bn stake in Vodafone Idea: report
04 Sep 2020
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Verizon Communications, the largest wireless carrier in the US, and Amazon.com inc have reportedly resumed talks to acquire stake in loss-hit Vodafone Idea Ltd, following the Supreme Court verdict that gave the company more time to pay up dues to the government.
Reports say Verizon and Amazon may invest more than $4 billion to buy a significant stake in the struggling Indian telecom joint venture id UK’s Vodafone plc and the Aditya Birla Group company Idea Cellular Ltd.
Acquisition of a majority stake in Vodafone Idea would help Amazon set up competition against Reliance Industries. For Verizon, it would open up a market for 5G telecom offerings.
Vodafone Idea will have to pay over Rs50,400 crore as the AGR dues to the department of telecommunications over the next ten years. This means an annual outgo of more than Rs5,000 and interest payable on it. For loss-hit Vodafone idea this could be too heavy a burden considering the continuing erosion of revenue and depleting customer base.
The company reported a staggering loss of Rs25,460 crore in the June quarter due to one-time charges, including provisions to cover payments due to the government.
The board of Vodafone Idea is meeting on 4 September to discuss fund raising options. In a late-night filing on Tuesday, Vodafone Idea said that its board will meet on 4 September to consider proposals for fundraising.
Earlier this year, reports said Google was in talks to purchase 5 per cent stake in Vodafone Idea, but that did not happen as the search giant chose to invest $4.5 billion in Reliance Jio.
With no rise in revenues and continuing losses the telco is left with no alternative than raising investor funds to pay Rs50,400 crore towards AGR dues. It might also have to think in terms of hiking tariff to sustain in the market.
While Amazon has a major presence in India, Verizon is present in India through its media and online unit Oath Inc.
The US wireless carrier has also partnered with Bharti Airtel Ltd in the past and, most recently, in July, when it launched the BlueJeans video-conferencing service in India to serve business customers.
The collaboration will help Vodafone idea expand its connected ecosystem to include products and services that go beyond telephony, according to analysts.
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