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VI’s ambitions may get a lift 🗼
Vodafone-Idea is looking to raise about $2 billion from a consortium of investors led by global alternative strategy leader Oaktree Capital Management and Varde Partners, to solidify its financial standing and help compete in India.
The company had announced intentions to raise a while back, and is basically counting on the funds to pay off some ₹50,000 crores in back-fees it owes to the Department of Telecommunications—for which it had been hammered and put on a deadline by the Supreme Court recently. The structure of the deal is unknown, but with Oaktree it's likely going to be a mix of debt and equity.
The post-merger VI is struggling to get by, as losses mount due to erosion in customer base while operating expenses pile up as the company’s telco infrastructure needs upkeep. And then there is the payout to the government, all of which keeps them from funding growth initiatives, which forced them to even consider bumping prices by 15-20%.
Takeaway: raising outside capital won’t be hard, considering India is an attractive growth market, and who doesn't want a piece of the action right away! But it's likely going to come at expensive terms that leaves VI management with little options. Also, steering the behemoth out of the mess while gaining share and building an alluring digital portfolio to match up competition will be a painful grind.
While on this subject,
VI’s calls for mobile tariff hikes got another backer—with Sunil Mittal of Airtel claiming that the telco industry in India cannot survive low prices forever. Airtel hasn’t disclosed any concrete plans yet but for the sake of consistency it could go with the 15-20% bump too. But if Jio doesn’t comply with them, this move could result in serious subscriber losses. Riks hai.
Embrace for more of Wolf Gupta 💰
Byju's is in talks to raise another $200 million, from institutional bellwethers including BlackRock and T.Rowe Price, eyening a valuation of $12 billion. While BlackRock is an existing investor, T.Rowe Price will be a new entry on the cap table, and likely signals Byju’s preparedness for its looming IPO.
So far in 2020, the company has raised over $1.2 billion or nearly 50% of all the capital it has raised in its history. Cash troves were filled in over 5 rounds this year that saw literally ALL of the biggies (Mary Meeker, DST Global, General Atlantic, Silver Lake yada yada) jumping in for a piece—underlining how uniquely tempting the India ed-tech opportunity remains.
And their metrics are equally mind blowing too—Byju’s saw its revenues doubling to nearly ₹ 2,800 crores in 2020. The company added 25 million new students during the lockdown, taking total enrollment count to over 73 million, out of which 5.1 million are annual paid subscribers! Beat that.
Education in India is a perennially fertile market—and like it or hate it, Mr. Wolf knows how to create buzz, and Mr. Wolf certainly knows how to close.
Spoils of the PayPal mafia 😎
Max Levchin’s Affirm is going public, marking the exit of yet another fintech rocketship, that pioneered the consumer POS lending model for the digital era.
The company basically gives shoppers the option to split their bill into monthly payments right at checkout, helping merchants convert consumers who may be deterred especially when buying bulky and large ticket items online.
Quick rundown of all the things that matter:
Revenue over the past year of $510 million, up 93%!!
For last quarter, revenue jumped 98%—accelerating in the aftermath of COVID
Losses dropped by half last quarter, now just $15.3 million
FYI, the buy-now-pay-later model has existed for centuries, mostly riddled with shady fees and convoluted terms, but Affirm changed the game online by a fresh approach, standardizing and simplifying the service with transparency. By putting enviable brand partnerships in place, the company grew up to dominate the market in no time.
Also the way the business model is structured by them is ingenious—they charge consumers an interest for unpaid installments. Then they make money from a small commission paid by merchants to facilitate the transaction. And then they also buy consumer loans from bank partners, which gives additional interest income to the company.
Anyway, a range of other fintechs created in the aftermath of the global financial crisis will go public over the next 1-2 years (including Robinhood, Betterment etc.), and investor reception to Affirm will help set the tone for the group. So far, the mood seems LIT.
Closing out on Snap’s moves 👻
Snap’s recently heated shopping spree has found itself at the doorstep of UK based Voisey, a music creation app, that allows users to create their own tracks using a variety of vocal effects.
Just like snapchat filters, the app has support for audio filters and autotune that can enhance a user's voice, and analysts predict Snap will probably integrate the service as a feature in-app, to allow users to create more audio-first content on the platform. Also, last week they had acquired Voca.ai for a massive amount, which makes us think something exciting is cooking within the audio-space at camp Snap for sure. Watchout clubhouse.☝️
What else are we snackin’ 🍿
🤙 Who callin’? - Google is reportedly looking to launch a truecaller like app called Google Call which will provide caller ID and spam protection.
🙄 Big tech vs. Pak - Google and Facebook have threatened to leave Pakistan after the Government granted regulators blanket rights to censor digital content. Citing indecent content and misinformation, the government is looking to limit scope of these platforms.
✋ Breeding vices - Karnataka Home Minister is interested in banning online games in the state soon, claiming the games encourage online gambling and that people are losing their hard earned money. Oh how the politicians love their bans.
Hit that 💚 if you liked today’s issue.
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