Mumbai, May 30, 2020.
Shares of Vodafone Idea jumped 35 per cent in Friday’s trade after a Financial Times report on Thursday said Alphabet Inc’s Google is exploring an investment in Vodafone Group Plc’s struggling India business. However, the stock pared gains following a clarification by the telecom company.
“Currently, there is no proposal as reported by the media that is being considered at the Board,” the company said in a clarification.
At 3:22 pm the stock was trading 12.89 per cent higher at Rs 6.57 per share, while benchmark Sensex was up 0.60 per cent at 32,394.48 points. It had jumped as much as 35 per cent in intraday trade to Rs 7.85.
Google is considering buying a stake of about 5 per cent in Vodafone Idea, the FT had reported. For a 5 per cent stake, Google will have to shell out $110 million. Its Nasdaq-listed parent Alphabet has a market cap of $968.05 billion.
“Amidst reports of Google picking up 5% stake in Vodafone Idea, it appears that the Indian telecom and online space is set to witness a spur of activity, which is always welcome. It would offer consumers a better deal and competition in this space is definitely required as the digital space has gained massive importance post COVID-19 and is set to witness multifold growth in coming years,” said Aamar Deo Singh, Head Advisory, Angel Broking.
The FT report said Google’s parent Alphabet was in talks to buy a stake in Reliance Industries Ltd’s Jio Platforms but lost out to Facebook in closing the deal. “Pursuing Vodafone Idea instead would potentially pit Google against Facebook and an increasingly dominant Jio but the company could also make multiple investments in India,” the report said.
Last month, Facebook Inc agreed to invest $5.7 billion for a 9.99 per cent stake in RIL’s digital arm, Jio, which competes with Vodafone Idea and Bharti Airtel Ltd in India’s fiercely competitive telecom market.
Indian telecom space is now dominated by two players Reliance’s Jio and Bharti Airtel, while Vodafone Idea has been struggling to see if it can see a revival.
The telecom giant that emerged after the merger of Vodafone and Idea, has been asked to pay Rs 58,000 crore by the Department of Telecommunications.
The company’s self-assessment puts the adjusted gross revenue (AGR) dues at Rs 21,533 crore of which the company had paid Rs 6,500 crore till the middle of March.