Kumar Mangalam Birla, chairman of the telecommunications firm Vi, has written to the central authorities that he’s “more than willing to hand over” his stake within the firm to any public sector, authorities, or home monetary entity or to another agency that the federal government might imagine match, to be able to preserve Vi (previously often known as Vodafone Idea) going.
In a letter addressed to Cabinet Secretary Rajiv Gauba, Birla has mentioned that the corporate was attempting to boost Rs 25,000 crore from numerous buyers, however most of them had requested to be assured that the Indian authorities wished to “have a three-player telecom market”.
The Indian Express has seen a duplicate of the letter, which was written on June 7.
“To actively participate in this fundraising, the potential foreign investors (mostly non-Chinese and we are yet to approach any Chinese 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 (adjusted gross revenue) liability, adequate moratorium on spectrum payments, and most importantly, a floor pricing regime above the cost of service,” Birla wrote within the letter.
Without this “immediate active support” from the federal government on the problem of AGR, moratorium on spectrum funds and ground pricing, Birla mentioned the telco’s operations can be pushed to an “irretrievable point of collapse”, given its monetary state of affairs. Birla had sought the federal government’s help on these three points no later than July.
Birla owns greater than 27 per cent stake in Vi; the accomplice and international agency Vodafone Plc holds over 44 per cent. Vi didn’t reply to emails asking whether or not it had acquired a reply to Birla’s letter from the Cabinet Secretariat or the Telecom Ministry.
ExplainedDuopoly undesirable outcomeA duopoly within the telecom sector is prone to be an unpalatable consequence for the DoT and the sector regulators. If there isn’t any rapid help that may assist Vi get again on its ft, prospects on the backside of the pyramid will find yourself paying Rs 150-200 monthly only for fundamental providers — which might harm the targets of Digital India, specialists mentioned.
The firm has to pay a complete AGR of greater than Rs 60,000 crore over 10 years, or practically Rs 1,500 crore each quarter between 2021 and 2031.
In addition, the corporate owed Rs 96,270 crore as deferred spectrum obligations, and one other Rs 23,000 crore to banks and monetary establishments as of March 31 this yr.
Vi has unsuccessfully petitioned the Supreme Court a number of occasions, first difficult the AGR calculations performed by DoT, and after the courtroom dominated in opposition to it, in search of recalculations of its dues.
Following the Supreme Court’s AGR judgment in September 2019, Birla had mentioned throughout a media occasion that Vi must shut store if the federal government didn’t present aid on the legal responsibility it faces in previous statutory dues.
“It does not make sense to put good money after bad. That would be the end of the story for us. We will shut shop. If we are not getting anything then I think it is end of the story for Vodafone Idea,” Birla had mentioned.
Vi and Sunil Bharti Mittal-led Bharti Airtel stay the one two personal gamers to have survived the low tariff onslaught introduced by Reliance Industries Limited (RIL)’s Reliance Jio Infocomm.
Over the final 29 years that non-public firms have existed within the Indian telecom market, the variety of lively gamers within the business-to-consumer section has come down from greater than a dozen to simply three.
All the others had been knocked out one after the other —first after the Supreme Court’s order cancelling 122 telecom licences within the now notorious 2G rip-off case, and later with the low tariff regime.
With the looming risk of a Jio-Airtel duopoly within the Indian telecom sector, there have been requires the federal government to intervene indirectly. No aid package deal has, nonetheless, been introduced.
DoT officers on Monday mentioned it didn’t make a lot “financial sense” for the federal government to take over a non-public telecom firm at a time when it was “already struggling” to dump its stake in public sector firms across the nation.
“Even if a relief package is announced, it cannot be company-specific and has to be something which can benefit the entire industry as well as be in the favour of consumers,” a senior DoT official mentioned.
