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Relief package for telecom sector will enthuse investors, Apollo Global

The relief package for the telecom sector has enthused global private equity firms, including American private equity group, Apollo Global Management.

In July, it was reported that Apollo Global could invest up to $3 billion (₹22,400 crores) in Vodafone Idea to bring in the much-needed cash infusion that would help the Indian operator clear some of its long-standing debt, and invest in rolling out new networks. However, uncertainty around the policy had stalled the talks then.

Experts suggest that the telecom bailout package, announced last week is likely to bring in much-needed certainty and clarity to enthuse foreign investors.

Utsav Baijal, Head of India PE, Apollo Global, told BusinessLine, “The government has taken a very constructive step to support the telecom sector. The proposed reforms are good for the consumer, the taxpayer and give the right sign to the business community that the government is willing to listen and more importantly, willing to take action. We think that investor interest will only increase with such proactive measures.”

Baijal did not comment on a specific question on investing in Vodafone Idea.

The government has proposed overall nine structural reforms and five process reforms, which experts believe will bring certainty to the industry. Prashant Singhal, Technology Media and Entertainment and Telecommunications sector leader, EY, said: “The package is going to bring clarity going forward, whether on spectrum auctions, AGR definitions, regulatory uncertainty etc, which will help in getting investor confidence back to bring in foreign investments.”

Vodafone Idea was not receiving further investments from entities such as the Birla Group or Vodafone Plc due to uncertainty, and experts believe that Voda Idea can use the package to further raise funds.

Before Kumar Mangalam Birla’s resignation as the Chairman of Vodafone Idea, the company was trying to raise funds from several private equity firms, including KKR, Carlyle Group, Oak Hill, Cerberus Capital, GoldenTree, Pacific Investment Management Co, Twin Point Capital and Varde Partners, through binding investment pacts or hybrid convertible instruments comprising of bonds and warrants, with a linked equity option. The initial funds were to be utilised to boost Voda Idea’s 4G network and pay its long-standing dues. Experts said that these conversations could restart, now that there is certainty over a lot of issues, including AGR and spectrum usage charges. The Hindu BusinessLine

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