Kumar Mangalam Birla informed the government that he is ready to offer his stake in the Vodafone Idea Limited (VIL). This could go to any state-owned or domestic financial entity so as to keep the telecom company afloat and stress-free.
A VIL promoter and chairman of the Aditya Birla Group, Birla communicated this suggestion on June 7 via a letter to the Union Cabinet Secretary Raji Gauba. Deferred spectrum obligations and adjusted gross revenue have VIL in a debt of Rs 1.8 trillion. In September 2020, the board had announced a plan to raise Rs 25,000 crore but investors stepped back, citing a lack of government support.
Currently, Birla owns over 27 per cent stake in VIL, while Vodafone Plc holds over 44 per cent. The current market capitalisation of VIL is more than Rs 24,000 crore. Following losses, Vodafone Plc has already written off all its investments.
In his letter Birla has written, “To actively participate in the 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 AGR liability, an adequate moratorium on spectrum payments and 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.”
He further mentioned that without active and immediate government support, VIL’s financial situation will drive its operations to an irreversible point of collapse.
In the month of July, SC had dismissed petitions of VIL and Bharti Airtel and seek correction in alleged errors in calculating the AGR. While VIL calculated its AGR dues at around Rs 25,000 crore after paying a sum of Rs 7,800 crore, the telecommunications department calculated the company’s total AGR liability to around Rs 58,000 crore.
