Vi FPO rings in vigour for telecom sector, may reduce subscriber loss

Vodafone Idea's (Vi) recently concluded 18,000 crore follow-on public offer (FPO) has reinvigorated the telecom sector, as it may reduce subscriber erosion of the beleaguered telco, analysts said.

- SUBHAYAN CHAKRABORTY

"While this FPO provides VIL with a way out and shift from its current 'full of concerns' status to finally 'going concern' - it also reinvigorates the sector," Nuvama institutional equities said in an analyst report.

It stressed that the telco would need to raise tariffs soon.

"Given the multiple rounds of unilateral indirect tariff hikes that Bharti has taken over the last two years - it is highly likely that it will follow suit if VIL decides to take any substantial across-the-board tariff hike. Jio, with its eyes on a potential IPO in the coming years, would not want to let go of this opportunity, to increase its profitability and return on capital employed - given it already has a 45 per cent subscriber share in the industry," it said.