Promoters may invest Rs 10,000 crore in Vodafone Idea, says govt

The promoters of Vodafone Idea – Vodafone Plc and the Aditya Birla Group – have assured the government that they would put equity capital into the company, officials in the Department of Telecommunications (DoT) told FE. The officials said the company executives have conveyed they intend to invest around Rs 10,000 crore in the company.

Queries in this regard sent to Vodafone Idea and Vodafone Plc on Monday remained unanswered till the time of going to the press.

The DoT officials told FE they are hopeful that Vodafone Idea would be in a much better position with the investments by the promoters and the competitiveness of the telecom sector would remain intact.

They also said guidelines will soon be announced for companies to pay the interest component of their AGR and spectrum dues by way of equity to the government.

The telecom relief package approved by the government has deferred payment of the AGR and spectrum dues of the operators by four years but with the net present value (interest) protected. With regard to payment of the interest thus accruing, the government has given the operators the option of paying by way of equity. For the principal amount, though, the government has retained the option of whether it would want to convert the dues into equity if any operator failed to pay up.

Speaking to FE last week, Vodafone Idea CEO and MD Ravinder Takkar had said the company will soon go for a fundraising exercise and the company’s co-promoters will have the opportunity to participate in it. To what extent would they participate and in what way is something only they can answer, but they have supported the company all along, Takkar added. “The promoters have invested `1.90 lakh crore in the last 10 years, so to say that the promoters are not being supportive is not correct,” he said.

Last year, the company had said it would raise up to Rs 25,000 crore from the investors. Later, the company said issues surrounding the adjusted gross revenue (AGR) dues and tariff structure had raised concerns in the minds of the investors, acting as an impediment in the fundraising exercise. However, last week Takkar had said the recent telecom reforms unveiled by the government had addressed all investor concerns and opened the doors for new investments. “The enthusiasm and interest to invest in the sector has increased with the government’s package,” Takkar had told FE.

On paying the interest amount in equity, Takkar had said this is something the company may be interested in, but a final decision would be taken only when the related guidelines come.

On the second part, where the government has the option to convert the principal amount in case a company fails to pay at the end of four years into equity, Takkar said since the AGR dues need to be paid over a period of five years and spectrum even longer, there would be enough time to look into the issue.

In the past, both Vodafone Plc and Aditya Birla Group had said they would not put any fresh funds into Vodafone Idea.

In April 2020, Vodafone Group had injected Rs 1,530 crore ($200 million) into Vodafone Idea as part of a pact agreed upon during the 2018 merger between its Indian subsidiary and Idea Cellular. It had then stated that the potential exposure of Vodafone Plc under this mechanism was limited to Rs 8,400 crore (€1.1 billion).

UK-based Vodafone Plc and Aditya Birla Group hold 44.39% and 27.66% stakes, respectively, in Vodafone Idea. The Financial Express