Birla willing to give stake in Vi to government

In an effort to save the company, Kumar Mangalam Birla, the chairman of Vi (formerly known as Vodafone Idea) is more than willing to hand over his stake in the telecommunications company to the government. He has written to the central government that he is more than willing to hand over his stake in the company to any public sector, government, domestic financial entity or to any other firm that the government may think fit, in order to keep the company going.

Birla said the company was trying to raise Rs 25,000 crore from various investors, but most of them had asked for assurance that the Indian government wanted to “have a three-player telecom market”.

“To actively participate in this fundraising, the potential foreign investors want to see clear government intent to have a three-player telecom market (consistent with its public stance) through positive actions on long-standing requests such as clarity on adjusted gross revenue (AGR) liability, adequate moratorium on spectrum payments, and most importantly, a floor pricing regime above the cost of service,” he said in the letter addressed to Cabinet Secretary Rajiv Gauba. “Without this immediate active support from the government on the issue of AGR, moratorium on spectrum payments and floor pricing, the telco’s operations would be driven to an irretrievable point of collapse, given its financial situation.”

However, DoT officials, as per Indian Express, said it did not make much financial sense for the government to take over a private telecom company at a time when it was already struggling to offload its stake in public sector companies. An official said that even if a relief package is announced, it cannot be company-specific and has to be something which can benefit the entire industry as well as the consumers.

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Birla has 27% stake in Vi, while partner and global firm Vodafone Plc has over 44%. Vi has unsuccessfully petitioned the Supreme Court multiple times, first challenging the AGR calculations done by DoT, and after the court ruled against it, seeking recalculations of its dues. Birla, following the Supreme Court’s judgment in September 2019, had said that Vi would have to shut shop if the government did not provide relief on the liability it faces in past statutory dues. “It does not make sense to put good money after bad. That would be the end of the story for us,” he had said. “We will shut shop. If we are not getting anything then I think it is end of the story for Vodafone Idea.”

It has been highlighted that over the past 29 years that private companies have existed in the Indian telecom market, the number of active players in the business-to-consumer (B2C) segment has come down from more than a dozen to just three. The Supreme Court’s order had cancelled 122 telecom licences in the infamous 2G scam case, and later with low tariff regime.