Jio fears spur investment: Vodafone to pump in $3 bn into India as competition hots up

Call it a Jio effect. Reliance Jio’s rollout of the much-awaited 4G services earlier this month has clearly shaken up the telecom sector. Incumbent telecom operators are already feeling the heat and are fast changing their business strategy to stay in the competition. [caption id=“attachment_2629702” align=“alignleft” width=“380”]  Reuters[/caption] Not to stay behind, Vodafone, too, has decided to shell out funds for its India operations. The global telecom giant is contemplating equity infusion of $3 billion or Rs 20,100 crore into its India arm by paring its debt, The Economic Times report said. For the fiscal year 2015-16, Vodafone India’s standalone debt stood at Rs 81,500 crore, the ET report said. The planned equity infusion could be in the wake of heightening competition in the Indian telecom sector post the Reliance Jio Infocomm’s entry, besides getting ready to bid for spectrum auction to be held early next month. “Overseas market conditions make it favourable to replace the debt here with equity as the return on equity is higher here and it will cut the debt servicing costs,” the ET report said quoting a source. However, the company may defer the planned IPO of its Indian unit due to pressure on the overall valuations of the telecom stocks after Reliance Jio officially launched its service last week. Vodafone India is planning to raise between Rs 13,300-20,000 crore through its public issue. “We have started IPO preparations, which includes conversations with banks, but no final decision has yet been taken as to whether or not we will IPO,” a PTI report had said quoting Vodafone spokesperson in June.