Title: Significance of Vodafone Idea with Nifty 50
Author: Vaishnavi Shinde
Introduction: Vodafone Idea Limited is an Aditya Birla Group and Vodafone Group partnership. It is India’s leading telecom service provider. The Company provides pan India Voice and Data services across 2G, 3G and 4G platform. With the large spectrum portfolio to support the growing demand for data and voice, the company is committed to deliver delightful customer experiences and contribute towards creating a truly ‘Digital India’ by enabling millions of citizens to connect and build a better tomorrow.
Objective: Calculation of beta of Vodafone idea
Literature Review:-
A Post-Merger Analysis of Vodafone-Idea Ltd
The merger includes different percentage of shares for Vodafone and Idea while the rest belongs to the public shareholders. Approximately, Vodafone will have 45.1% of shares of joint venture after passing the ownership of 4.9% to Aditya Birla Group for 3,900 crore post the completion of merger. The requisites for the merger was that, it required approval from both the telecom service providers for the appointment of CEO and COO. The chairman of the merged entity would be Kumar Mangalam Birla and chief financial officer would be appointed by Vodafone. From a total 12 members of the board, 3 members each would be nominated by the promoters and rest of the members would be independent, Vodafone India and Idea cellular Ltd made an agreement to complete the merger within 24 months. On 31st August 2018 the merger was completed and the joint venture was renamed as Vodafone Idea Ltd.( Vijay D. Joshi, November 2019)
International Journal of Research Publication and Reviews
On March 20, 2017, India’s third-largest telecommunications company, Idea Cellular (Idea), announced US $ 23 billion, to merge with the world’s second-largest company, Vodafone India Limited (Vodafone), to build India’s most lucrative company estimated at US $ 12.5 billion Vodafone !dea Ltd. (Vi) was created by merger of Vodafone India Ltd. And (excluding its interest in Indus Towers) with !dea Cellular Ltd. on 31 August 2018 which became one of the leading telecommunications operators in India offering voice, data ,enterprise services ,and other value added services in twenty-two circles. It has total 1,768.4MHz of spectrum across difference frequency bands out of which 1,738.4MHz spectrum is liberalized and can be used towards deployment of any technology (2G ,3G ,4G or 5G.Virecently acquired 23.6MHz of spectrum in March 2021auction. The company offers Voice and Data services on 2G,3G and 4G technologies across 22 service are as in India .With its large spectrum portfolio to support the growing demand for data and voice ,the company is committed to deliver delightful customer experiences and contribute to wards creating a truly Digital India by enabling millions of citizens to connect and build a better tomorrow. (Ashokbhai, Mohammad Shakil, Dr. DipakGaywala, March 2022).
Data Collection: Data was collected from NSE site from the time period of 1st April 2022 to 31st March 2023. Then it was manipulated by finding the Friday Closing price. Then X and Y regression was done (weekly return of Nifty is X and weekly returns of Vodafone is Y).
Data Analysis:
Vodafone idea Returns = 1.15920316 + 1.15920316 Nifty returns
(4.783757221)
R^2 = 0.318349384
N = 51
F =22.88433315
Significance = 1.61717E-05
Result: The above equations shows the relationship between X and Y is positive. Which means there is a direct relationship between them which means if X rises then Y also increases and vice versa.
In this equation b = 1.15920316 if X rises unit demand will rise 1.15920316 units. Figure in bracket is t-stat for b it is more than table value so b is statistically significant at 5% level of Y.
R^2 is 0.318349384 which means 31.83% is explained by which is also more than table value means overall model is statistically significant level at 5% level.
Conclusion :
Beta obtained is 1.15920316 which is more than 1, Therefore, it is good for short term investment.
Reference:
1) Joshi ShubhamAshokbhai, Belim Mohammad Shakil, Dr. DipakGaywala.International Journal of Research Publication and Reviews, Vol 3, no 3, pp 209-215, March 2022
2) Vijay D. Joshi on 30 November 2019. A Post-Merger Analysis of Vodafone-Idea Ltd,