Vodafone-Idea in trouble: Will this telecom company shut down?
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Mumbai : Amid growing competition in the telecom sector, Vodafone-Idea seems to be in trouble. The company can stop its operation anytime due to factors arising due to increasing competition between increasing debt as well as delay in raising the required amount. Domestic brokerage Kotak Institutional Equities on Monday said that with inflation remaining above the Reserve Bank of India’s (RBI) tolerable level, telecom companies will be able to recoup after next year’s general elections, possibly in June 2024, according to a report in news agency Bhasha. Fee rates will start increasing.
Vodafone-Idea will not be able to start 5G services
Kotak Institutional Equities said in its report that in the absence of an increase in the tariff rate, Vodafone-Idea would not be able to make the necessary investments and start 5G services. This will reduce the number of customers of the company further and it will be difficult to make the capital raising plan a reality.
Jio-Airtel will remain in the market
It has been said in the report that after the closure of the operation by Vodafone-Idea, only two companies Reliance Jio and Bharti Airtel will remain in the telecom market. As a result, there is concern about the monopoly position of the two companies in the long run.
Mobile rates to increase in June 2024
According to the brokerage company, telecom companies are likely to increase tariff in June 2024 only after the general elections. The reason for this is retail inflation being above the tolerable range of RBI and the elections to be held in the states.
Market share may decrease
According to the report, the delay in increasing the mobile tariff rates will adversely affect Vodafone Idea and it will be difficult to survive in the market. It has been said that Vodafone-Idea needs to increase investment to increase 4G coverage and start 5G services. Cautioning in the report, it has been said that if the company does not invest, its market share will keep decreasing.
Why will the company’s operation stop
It has been said in the report that according to our estimates, Vodafone-Idea may face a cash shortfall of Rs 5,500 crore in the next 12 months and may also have to close its operations due to non-increasing rates or delay in raising capital.
Vodafone-Idea’s rating suspended
The brokerage company has also suspended the rating of Vodafone-Idea. He has made it clear that raising funds is a difficult task for the company in view of the debt of more than Rs 2.3 lakh crore and the possibility of reduction in market share.
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