The Indian government acquired a 33 percent equity stake in Vodafone Idea (Vi) to alleviate financial stress and support the teleco. However, nearly six months after this move, the government's patience seems to be waning as the company's promoters fail to infuse the promised funds, according to a Times of India Report. Vodafone Idea's inability to secure the much-needed funding is affecting its 5G launch plans and casting doubt on its future prospects, putting the company on watch.
Also Read: Govt Expects Vi to Rollout 5G Soon: Report
Promoters' Delay in Fund Infusion Raises Concerns
The report quoted Insiders familiar with the matter who have indicated that Vodafone Idea is actively working on a plan to infuse funds "as early as possible." Nevertheless, top sources within the Department of Telecommunications (DoT) and the finance ministry are watching the developments at Vi "with concern" over the prolonged delays "despite repeated assurances" from the company's promoters to bring in funding.
Government's Equity Stake and Intentions
The report quoted an official from the government, who chose to remain anonymous, lamented, "It's nearly six months since we took the decision to pick up equity in the company, but there has been no movement (in the fundraise) so far. We have been assured, and re-assured, multiple times by the company's management over the funding matter, but still there has been no movement. This is disturbing and frustrating."
The finance ministry, which had granted the final approval to a substantial telecom relief package, shares DoT's unease over the lack of progress at Vodafone Idea.
Also Read: Vodafone Idea Loses Over 2 Million Wireless Subscribers, Continuing a 23-Month Streak: TRAI
Vodafone Idea's Struggle with Financial Stress
"We were initially coaxed by the management to expedite our entry into the company, following a decision of the Cabinet, and the promoters assured us that it will help them raise funds. However, no such movement has happened so far," the report cited a government source as saying.
According to the report, the government is also worried about Vodafone Idea's mounting challenges, with heavy losses and a staggering debt burden dragging the company down. In addition, Vodafone Idea has been losing its customers to competitors like Reliance Jio and Bharti Airtel, further deepening concerns about its future viability.
