Birla offers Voda Idea stake to government

NEW DELHI: Unable to work out a revival for the ailing telcom company Vodafone Idea (

VIL

), company chairman Kumar Mangalam Birla has offered his group’s stake to the government or any other entity that it deems fit, saying that the measure is required in “national interest” as the operations are headed towards an “irretrievable point of collapse”.

Birla’s appeal, through a letter written to cabinet secretary Rajiv Gauba on June 7, displays a last-ditch effort by the Indian group — which holds around 27% stake in VIL (UK’s

Vodafone Plc

holds about 44%) — to salvage the company ahead of possible defaults on statutory payments and bank dues.

Sources in the government, however, said that not much can be done for the company immediately as telecom companies had already been given relief in the form of spectrum payment obligations as well as AGR dues. Any relief for a particular entity does not appear practical, although the government is still trying to work out ways to ensure that there are “three private telcos” that operate in the country, the other two being Mukesh Ambani’s Reliance Jio and Sunil Bharti Mittal’s Airtel, the sources added.

Vodafone Idea, however, appeared to be in deep distress and the problems for the company — which was formed from the merger of Idea Cellular, controlled by Birla, and Vodafone’s India subsidiary in 2018 — are far from being resolved. Outstanding debt of the company, which has slipped to the third spot after being on top, was estimated at Rs 1.8 lakh crore at the end of March 2021 (see graphic).

“It is with a sense of duty towards 27 crore Indians connected by Vodafone Idea, I am more than willing to hand over my stake in the company to any entity — public sector/government /domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” Birla said in the letter where he made an appeal “to save the company and strengthen it in the national interest without any consideration of our private interest.”

In his letter, Birla said that the company “has been trying” to raise Rs 25,000 crore funding through “mostly nonChinese” investors, but the latter “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 AGR liability, adequate moratorium on spectrum payments most importantly, a floor pricing regime above the cost of service.”

“In the absence of definitive steps in this regard, the potential investors have understandable hesitation to invest. I want to emphasise that without immediate active support from the government on these three issues (certainly by July ’21), VIL’s financial situation will drive its operations to an irretrievable point of collapse,” Birla said in his letter to Gauba. While the SC has refused to give any specific re-think on the AGR payment issue in its hearing on July 23, the floor price matter has been languishing with regulator Trai for over a year with not much headway.

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