Kumarmangalam Birla offers AB Group stake in Vodafone Idea to govt
03 Aug 2021
Aditya Birla Group chairman and promoter of Vodafone India Ltd (VIL) Kumar Mangalam Birla has told the government that he is willing to hand over his stake in the ailing telecom company to any state-owned or "domestic financial entity" in order to ease the financial stress and keep the telecom company afloat.
Birla, a promoter of VIL, along with the UK’s Vodafone Group, made the suggestion in a letter to union cabinet secretary Rajiv Gauba on 7 June.
VIL has a debt of around Rs1,80,000 crore, which includes deferred spectrum obligations and adjusted gross revenue liabilities. Its board had, in September last year, announced plans to raise Rs25,000 crore but failed to muster investor interest in the absence of government support.
“It is with a sense of duty towards 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,” Birla said in his letter.
The Aditya Birla Group owns over 27 per cent stake in VIL, while Vodafone Plc holds over 44 per cent. VIL has a current market capitalisation of over Rs24,000 crore. Both promoters have decided against infusing fresh funds in the company while Vodafone Plc has already written off all its investment in VIL following continuous losses.
“To actively participate in the fund raising, 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, 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,” Birla wrote.
Birla further said that VIL’s financial situation will drive its operations to an irretrievable point of collapse without immediate active support from the government on these three issues.
VIL lost all hope after the Supreme Court last month dismissed petitions of VIL and Bharti Airtel seeking correction in alleged errors in calculating the AGR. VIL had calculated its remaining AGR dues at around Rs21,500 crore against the telecom department’s estimate of Rs58,000 crore, The company has so far made a payment of Rs7,800 crore towards its liabilities.