Vodafone Idea receives government relief package
Debt-stricken mobile carrier Vodafone Idea is looking at funding deals with potential investors after receiving a relief package from the Indian government.
The telecoms operator has a net debt of US$25.86 billion (1.91 trillion rupees) including government dues of 1.68 trillion rupees.
The chairman of the company, Kumar Mangalam Birla had previously offered to transfer the group’s entire shareholding to the government to help stave off collapse.
Last week the Indian government approved a relief package for the country's struggling telecoms sector. This includes a four year moratorium on airwaves fees due to the state; an extension on the tenure of airwaves, from 20 to 30 years; and completely free sharing of spectrum between carriers.
According to reports, the package boosted the share prices of Vi as well as Bharti Airtel.
As Capacity has reported in the past, the country’s 5G plans are also being held up because the government department is not approving new equipment quickly enough.
The sector has been struggling since 2016 when the entry of billionaire Mukesh Ambani’s Reliance Jio sparked a price war that forced rivals out of the market and led to falling profits.
After this, private phone operators exited the market, filed for bankruptcy, or merged with rivals in order to continue existing.
In 2019, the Indian Supreme Court ruled that telecoms would have to pay back fees of around $13 billion.
The government’s latest action is aimed at providing relief to the sector.
Vodafone Idea is the third-largest mobile telecoms network in India and the 10th largest in the world but hasn’t reported profit annual profit since 2017.
“There is no doubt that this company will survive and not only will it survive, it will do well and also compete in the market,” said Vodafone Idea CEO Ravinder Takkar (pictured).
“We were engaged in fundraising for several months. We have investors, international and domestic, who have shown interest in investing in the Indian telecom industry.”