Do you believe KMB and Vodafone global will sell VIL to Amazon for 2 B USD? How did you arrive this calculation? Quality of your message is very low as far as VP is concerned. VIL is Vodafone/Birla group, 73% promotor, zero pledge, current carnage only benefit to Vodafone, high data consumption, loan moratorium, NCLT delayed for a year, Even corrupt SC/DOT/Govt can take risk of shutting down VIL. Network is much better than Jio now, largest spectrum hence can play with data offering. Integration completed. Sus churning stopped. Fibre optic valuation 14000 cr, 4500 indus stake, Vodafone stake in Indus 30000 cr. Remaining AGR dues 16000 cr, Spectrum payment delayed. Arpu rising. What else u want?
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The current MCap of the company is around 8000cr or around $1bn, I took double the value of that. When valuing the company you have to look at the enterprise value and not just equity value as any buyer will take on over 1.5lac crores of liabilities in debt and agr dues. As a result the equity value at this stage is not very high but a company willing to take on the risks can create tremendous value over the long term. Whether Vodafone or Birlas sell we donât know but then they will need to inject more money into the company to keep it from going bankrupt and they have mentioned they are are not keen on investing much more. So they will need to decide on this sooner rather than later as Vodafones NCDs mature in July for which they will need more funds.
News flash:
Google explores Vodafone Idea stake as part of India push
https://www.ft.com/content/3f763918-d0b1-4a02-a581-e241753c75eb
Something about the way the article has been written, gives a feel that the news is too good to be true. But who knows! Maybe, as suggested in the article, Facebookâs India push via Jio may have indeed pushed Googleâs hand!
Notice that this news is coming on a thrusday during the monthly expiry. Last I remember such rumours were made during the same time for Yes bank. So if history is anything to go buy I would look past these rumours.
FYI this news was published after market hours not during market hours.
Seems like the market news of Googleâs stake in Vodafone has caught hold of an eye of investors
- there is Airtel, why only Vodafone? Fairly due to idea cheap valuations - if so then debt isnât it a major concern?
Fairly, i donât get the point that airtel has large customer and Vodafone is merely thereâŚ
Debt : 53000 crore
December quarter loss : 6,453 crore
Increase in revenue during the period : 11,089.4 - due to new 4G additions
Finance minister has said that, she wont let any telecom industry to be closed
Well letâs see where it goes from hereâŚ
Disc : Took a small position under technical analysis, the fundamentals are not in tact
Kindly note am not SEBI registered investor or analyst - do your own research or consult your financial advisor
Someone like Google will only buy 5% if they know their money is safe, obviously certain assurances have been made to them which we are not aware about right now. Why will anybody put any money into a company that is going out of business? The questions now isnât about whether Vodafone will survive , the Google News indicates it definately will, but at what valuations would it be a good investment?
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Like I said I think People are too hopefull
Vodafone Idea clarifies on reports of Google eyes stake in Vodafone Idea. Company says it constantly evaluates various opportunities for enhancing the stakeholdersâ value. Currently, there is no proposal as reported by the media that is being considered at the Board
Took them almost a day to respond:
Went up 35% and ended the day still above 12.93%. Monday should be interesting.
Surely there would be some fast fingers who would have got in and out of this today. Not for folks like me with non-industrial grade intestines!
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Whether Google Invset in Vodafoe or not, but Kumara Mangalam Birla(KMB) and Voda UK will run this compny for sure. Voda is the third top telecom company and India can have atleast three Telcom. Voda UK is a big Telecom Company wich supports Voda Idea. KMB will run this company and this is the future New Tech Business. KMB might come out of Retail being huge losses but he will run this company. By infusing few thousand crores VodaIdea valuations would goup in multiples. These present market rates are NCLT / Insolvent company rates. At present which share has potential to become multibagger ?
The way things have been played out pops a lot of questions in my mind. Why would a entity like Google look at a measly stake in a company? If it was a meaningful stake, may be would have made some sense. Then it was âsourcesâ that reported the ânewsâ in the hungry media. How come the clarification was made that late (post 2:30pm), the next trading day?? Why not the 1st thing in the morning? Most market groups had shared this rumor on wotsapp the previous day itselfâŚAnd one must not forget the fact that the stock had already risen by more than 50% in the past 20 trading sessions, before this rumor was floatedâŚ
This leads me to infer that this is a well calculated strategy by some vested interests, knowing the risk appetite returning back to the markets. Several mid/micro cap stocks have done well over the last month and half already. As always observed, retail investors tend to display FOMO, post such sharp runs, making them look at every rumor positively.
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Stock has continued going up even after the clarification so there is obviously something brewing that we are not aware about. If it was rumor floated by vested interests then stock should have gone back to previous levels.
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With banks looking at every feasible opportunity to lend to credible businesses - it would not need an expert to figure out what Vodafone can do. Banks across Briton, EU and US would be happy to lend money to Vodafone currently at interest rates that no one could even imagine about 6 months back. I wont be surprised if Vodafone decides to substantially invest into India operations and shore up the balance sheet of Voda-Idea. After all Voda-Idea still has in excess of 25 Crore paid users and this is one opportunity that they may not want to miss. If they use the current opportunity wisely and put the money for right purpose - India operations alone can change the fortunes of Vodafone Plc.
Disclosure: Entered back in October 2019 with a very small tracking position and added during April 2020.
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I agree to your point. The company still has a good number of subscribers and is in an Industry with very strong entry barriers. But Vodafone in Nov 2019 reduced itâs carrying value of India investments to zero. Considering that wonât it be an uphill task for Vodafone to convince itâs shareholders to invest more into Vodafone Idea
Discl: tracking not invested
Honestly speaking, impairment of investments is a mandate that companies need to follow based on future outlook of their investments. Back in November 2019 the world we lived in was a totally different place. What matters today is the revised scenario and the opportunity at hand - it only takes a good presentation from the board of Vodafone Plc to a smart investment manager for the deal to go through.
In India we are still way behind on both assessing impairments as well as revivals(Vodafine Plc was prompt wrt to impairment, but the interesting question is what did the Birla group companies which invested in Voda-Idea did in their own balance sheets!). Western market is matured enough to understand the changing business dynamics and make prompt decisions. Bankers in west do not have to worry about the PILâs and public perception - all they are worried about is their own future and they will deploy it where they see the most business sense.
AJ
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Makes sense âŚBut I donât think any business dynamics has changed other than a tariff hike made in December 2019 . A hike was anyway going to happen sooner or later. Telecom industry had already consolidated into 3 players before November itself . Only thing that has changed is the PE/investor interest seen of late in Jio and other telecom companies. All the other things are almost the same as it was in November '19. Infact, Supreme Court dismissed the AGR review petition in January . I was invested in the company and exited on KM Birla announcing his doubts on the company continuing to run in the absence of govt relief. I wouldnât put my money in a company when the promoter itself isnât confident . Maybe itâs just pressure tactics to get better payment terms. Iam very positive on telecommunication industry. I will definitely buy the company when the promoters shows their commitment to the company , when they try to allay the fears of investor. Or else when the govt comes with some staggered payment terms for AGR dues.
Waiting on the sidelines for more clarity.
Disc: Not invested. May take a position. Invested in peers.
Would vodafone putting money into company not considered promoter having confidence?
Disc: invested in vodafone idea
Payment was made by Vodafone under contingent liability mechanism owing to AGR dues company had prior to merger. Iam not in any way saying that itâs facing liquidation . it could very well end up a multibagger this . I just wanted to point a few negatives that I had in mind
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Speaking away from the fundamentals, I believe the business dynamics have changed a little, the debt on Vodafone idea is phenomenal and with IBC gone there is no fast track measure for recovery. If the company is made to undergo bankruptcy (government not supporting on AGR dues) this shall cause unwanted stress on already stressed financial sector, this along with a possible duopoly in the telecom sector which shall in no way be beneficial for the government. Also there is renewed foreign interest in the Indian telecom sector with COVID-19 and the spurt expected in E-commerce, case in point being Jio. These should let Vodafone survive for now and maybe get is house in order.
P.S. Critical comments most welcome.
Disclosure-invested now exiting cost.
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As you said, there is a lot of interest in Indian telecom sector. And if it is made to go through bankruptcy, would the potential buyers like Google, not line up to get a piece?
Or do you guys think all the hype around telecom is only due to Jio and that too because it is planning to enter into retail business? (though I fear that to again attract customers to Jio retail, they will start another round of discounts which will take the fight to likes of Amazon and Flipkart, which would mean it needs to generate a lot more cash)
Disc: invested in vodafone idea