‘Willing to hand over VIL stake’

Kumar Mangalam Birla.  

Vodafone Idea chairman Kumar Mangalam Birla has told the government that he is ‘willing’ to hand over his stake in the struggling telco to any entity, public or private, that could keep the company as a going concern.

In a letter written in June to Cabinet Secretary Rajiv Gauba, the billionaire businessman also pointed out that potential foreign investors were hesitant to invest in Vodafone Idea Limited (VIL) due to lack of clarity from the government on issues such as adjusted gross revenue (AGR) liability, moratorium on spectrum payments and a floor pricing.

Mr. Birla emphasised that without the government’s immediate active support on these three issues, Vodafone Idea’s financial situation would drive its operations to an “irretrievable point of collapse”.

“It is with a sense of duty towards the 27 crore Indians connected by VIL, 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,” Mr. Birla wrote in the letter dated June 7, a copy of which has been seen by The Hindu.

He added that while the company had been trying to raise ₹25,000 crore to sustain operations and pay regulatory/governmental dues, potential foreign investors — mostly non-Chinese — wanted to see “clear government intent to have a three-player telecom market... through positive actions on long-standing requests such as clarity on AGR liability, adequate moratorium on spectrum payments and most importantly, a floor pricing regime above the cost of service”.

In the absence of definitive steps on these issues, Mr. Birla said potential investors had “understandable hesitation” to invest. Mr. Birla holds more than 27% stake in Vodafone Idea, while partner and global telco Vodafone Plc holds in excess of 44%.

“Over the last year, VIL has made every possible effort to improve its operational efficiency through prudent capital spending, manpower restructuring and a whole host of cost reduction measures. Despite all that, the financial condition (particularly the liquidity position) of the company has sharply deteriorated,” he said.

According to official data, the company’s adjusted gross revenue (AGR) liability is about ₹58,254 crore, of which it has paid ₹7,854.37 crore. In addition, as of March 31, the company owed ₹96,270 crore in deferred spectrum payment obligations and ₹23,000 crore to banks and financial institutions.

“I and my team will be more than happy to work with the government to urgently explore all possible options and to save the company and strengthen it in the national interest without any consideration of our private interest,” he said.

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Printable version | Sep 21, 2021 5:59:58 PM |

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