Vodafone’s investment into Vodafone Idea (India) is the result of multiple international finance transactions over many years. Despite long term investment and technology transitions Vi has continuing losses from operations with the last profits in 2017. Spectrum fees and other Indian governmental costs created a liability of USD$6.74B due over a ten year period.
The preferred position of 35.8% to be held by the Indian government special undertaking SUUTI changes Vodafone from 44.39% to 28.5%, and Indian Aditya Byrla Group (ABG) 27.66% to 17.8% when concluded.
The previous VI resulted from merging Vodafone India and ABG Idea into a single enterprise. Under an industry rescue plan (September 2021) in return for conversion of spectrum fees and Adjusted Gross Revenue (AGR) dues into equity the Indian government retains an industry structure with three major carriers instead of continued concentration led by Jio and Airtel. The valuation for VI at USD$18.8 B ($USD 70/customer) is low compared with the USD$54.7B (USD$157/customer) of Bharti Airtel with Google’s investment.
Vodafone is a great example of a failed Alien invader. They had the resources, the people, the know-how, but they failed to become profitable in a very different marketplace. Contrast that to Google’s experience where they entered the market via investment and software and garnered access to 800 M subscribers.
The Indian government’s equity stake is the equivalent of $26 per subscriber. Vodafone with all its resources didn’t believe that they would recoup that money, so they effectively converted that debt to equity. The Indian government acted to maintain a 4 carrier market.
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