Jump-up plan of Airtel
Anushka Trivedi
Financial Content Marketer | Finance Copywriter | Content Strategist | Personal Branding for Finance Enthusiasts | Half CA
Airtel beats Jio
Yes, Airtel became the first company in the country to demonstrate a 5G network successfully in Hyderabad, earlier due to their increment in the validity prices demotivated the customers but now it seems like Airtel knows how to keep their stakeholders happy. A leading name in the telecom industry, Jio, the closest competitor of Airtel. Since revenues and new customer rates are declining, the company needs to come up with a survival strategy, as they did. Let's understand the whole fundraising & jump-up strategy of the company and also know the reason behind falling revenues.
Investor of Airtel GOOGLE or SHAREHOLDERS
Earlier a piece of raw information was fussing around the country about google investing in Airtel after Jio. Google's investment in Airtel would help them a lot to pay off its huge debts which are un-paid to the government.
Now it seems like shareholders of the company are capable enough not only to bring survival but also to bring growth at a steady rate. Airtel had announced Rs21000 cr. fundraising scheme via an issue of right shares which will help them to pay off their debts to the government and strengthen up their strategy towards 5G network launching in key cities.
Overview of Issuance
Effect of Announcement in stock market
The market effect of the announcement was already positive because of google's investment rumor, after the announcement of the company raising funds bring a bounce in share prices from Rs586.90 on 26 august when no such news was available, and risen to Rs620.45 on 30 august (on NSE).
However, it's not the highest of the Airtel but yes announcement affects the prices and expected to rise.
It seems like Airtel has happy shareholders and unhappy customers because they are increasing monthly validity prices which involve internet facility but that is not enough to delight customers. Let's know the reasons behind the unhappiness of customers.
Reason for increasing rates
According to the company tax rates for the telecommunication companies are so high that they are unable to pay off their debt to the government, they have to pay Rs35 on the earning of Rs100.
As per the department of telecommunication, Airtel is liable to pay Rs43980 cr. But according to the company they have to pay Rs31000 cr. out of which they have paid Rs13000 cr. and Rs18000 cr. remained to pay.
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Another reason for increasing rates is decreasing revenues of the company because of various attractive schemes of their closest competitor, Jio.
Jio is supported by the strong customers base and googles' investment of Rs33737 cr. Due to huge data facility like data add on of 1GB, 2GB, 6GB just for Rs 11, 21, 51 respectively. Jio knows its customers well. Airtel's rates are higher than Jio and cheap rate facilities are unavailable.
Competitor of Airtel affects adversely as their revenues fall by approx 53% in comparison to last year.
Now the biggest question is:-
Will they grow?
For this question, my answer is absolutely yes. Not only share prices, revenue, and loyal customers will also enhance. By paying off government debts Airtel will gain financial trust among their stakeholders which makes them invest in the company not only by way of shares but also in services. After paying off their debts company is planning to enter into 5g connections. If they keep their prices reasonable and facilities up to the expectations, customers will show loyalty towards them and it will prevent the chances of portability of sim networks by customers.
Access to improved data is the key to the development of the country overall. The dream of digitalized India is possible only when the public has the facility to use internet data without any interruptions. It will improve education as well as the economy of the country, we are waiting for speedy networking in every corner of the country.
Thank You