Vodafone Idea pushes for relief in meet with Telecom Min, stock soars 18%

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A day after former Vodafone Idea chairman Kumar Mangalam Birla met Telecom Minister Ashwini Vaishnaw, the telco’s shares closed 18.03 per cent higher at Rs 7.20 on the National Stock Exchange on market expectations of a relief package for the telecom sector. Sources in the Ministry said other senior executives from the company met Department of Telecommunications (DoT) officials on Thursday to discuss the health of the telecom sector while also pressing for a relief of some form.

Though the government has publicly stated that it wants to see “healthy competition” in the telecom sector, there has so far been no relief forthcoming despite public appeals from both Vodafone Idea and Bharti Airtel.

Among the various options said to be in consideration by the government is the possibility of a push for a floor price for services provided by telecom companies. Other options such as interest free moratorium on spectrum payments and encashment of bank guarantees are also on the table, DoT officials have said in the past.

The discussions for relief to the telecom sector have gained pace after Birla wrote to the Central government in June, offering to “hand over” his 27 per cent stake in the company to any public sector, government, or domestic financial entity or to any other firm that the government may think fit, to keep Vi going.

The June letter, however, was not the first time Birla had raised the request for a package from the government. In December 2019, he had, following the Supreme Court’s AGR judgment, said Vodafone Idea would have to “shut shop” if no relief was forthcoming from the government.
Birla’s comments had then come nearly a fortnight after the global chief executive officer (CEO) of Vodafone Nick Read made similar comments. Read had on November 12 that year said that future in India was doubtful and the company could be headed for liquidation if there was no relief from the payment of AGR dues. He had then also said that the global arm would not commit any more equity for India as the country “effectively contributed zero value to the company’s share price”.

A day later, however, Read sent a letter to the then Telecom Minister Ravi Shankar Prasad and said that his comments had been taken out of context by the media.

“I apologise for the impression that this coverage conveys. However, I wish to put on record that this does not reflect our version. You have my words that Vodafone wishes to continue its long history in India, given the right conditions, and we strongly believe in the potential of the country,” Read had said.

Apart from seeking relief from the government, Vi has also been trying to raise up to Rs 25,000 crore or bring in a strategic partner to steer the company out of woods. The funds, however, have so far not been arranged.

In his June 7, 2021 letter to the government, Birla made a mention of the company’s efforts to raise funds and said all non-Chinese investors they had talked to so far had asked to be assured that the Indian government wanted to “have a three-player telecom market”.