Just when everyone had scrapped Vodafone Idea in India, its telecoms joint venture in the country sent a strong signal that it will exist, possibly for years to come. At a virtual roundtable called to announce a strategic decision by Vodafone Idea, the telecommunications company, burdened with huge losses and heavy debt, launched a new brand identity for itself on Monday morning. It is the final step in the further integration of two telecommunications brands, senior executives said.
Addressing the media, Vodafone Idea CEO and CEO Ravinder Takkar addressed the meaning of the new brand: Vi (pronounced “we”). “The unified brand drives our tomorrow together,” he said, indicating that the partners would continue to invest. Later in the question and answer session, Takkar reserved his comment on whether the two partners will participate in the proposed 25 billion rupee fundraising exercise announced last week. However, he was clear on the tariff front: prices will have to go up, he said. “We are never ashamed of raising tariffs … and others have often followed us.”
To show the union, Aditya Birla Group Chairman Kumar Mangalam Birla and Vodafone Plc Chief Executive Officer Nick Read spoke of a shared future and referred to the government’s Digital India initiative as an important element in their business. . This is despite the fact that Vodafone plc stated last week that it will not generate new shares in the Indian business, where its net losses are set at Rs 25.46 billion in the June quarter.
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After keeping people guessing for many hours what the strategic announcement would be, the company launched a teaser campaign on social media Sunday night. Soon, the Twitterati got active talking about the ‘VI’ rebranding exercise. Vodafone’s official Twitter account posted: “Hi @Idea, are you ready for the big day?” Idea was quick to reply, “Yeah, I can’t wait.”
The relaunch, which will occur two years after the August 2018 merger of Vodafone and Idea Cellular, will have a combined brand identity and advertising surrounding it. Until now, the organization has been advertising the two brands separately.
Last week, the Vodafone Idea board approved plans to raise funds of 25 billion rupees through the sale of shares and debt. In the same week, the Supreme Court had allowed telecommunications companies 10 years of tiered payments in installments tied to adjusted gross income (AGR) while asking them to make 10 percent of the advance payment before March 31, 2021. Analysts said the court ruling failed. to give some relief to the telecommunications company that had sought a much longer payment term of 15 to 20 years.
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The October 2019 Supreme Court verdict upholding the Telecommunications Department’s definition of AGR (DoT), resulting in liability of Rs 1.47 trillion in quotas for the industry, was a double whammy for Vodafone Idea after from being hit by deep tariff cuts from Reliance Jio.
Vodafone Idea’s AGR fees are pegged at Rs 50,399 crore, of which it has paid Rs 7,854 crore. Its fees, a combination of two telcos, are much higher than Bharti’s. DoT calculations show that Bharti Airtel owes the treasury Rs 43,780 crore, of which the company has paid Rs 18,004 crore.
Vodafone has a 44.39 percent stake in the joint venture, while Aditya Birla Group owns 27.66 percent. The two partners have the same control on the board. The merger agreement suggests that Birla can buy an additional 9.5 percent of Vodafone to match its stakes.
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