Indian Govt Doesn’t Want to Sell Stake in Vodafone Idea Yet

The DIPAM has made it clear that the government doesn't intend to sell any part of its stake in Vodafone Idea. The officials have said that the government is invested in the company for the long term. Vi is expected to finalise fundraising with potential investors before the end of this quarter.

Highlights

  • Vodafone Idea (Vi) while struggling to make the business profitable, has actually given great returns to its largest stakeholder - the Indian government.
  • Earlier in 2023, Vi gave the government a one-third stake in the company.
  • Against the stake, the Indian government let go of Rs 16,133 crore worth of deferred interest dues on the spectrum that Vi had to pay in the future.

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vodafone idea govt doesnt want to sell

Vodafone Idea (Vi), a large Indian telecom operator, while struggling to make the business profitable, has actually given great returns to its largest stakeholder - the Indian government. Earlier in 2023, Vi gave the government a one-third stake in the company. Against the stake, the Indian government let go of Rs 16,133 crore worth of deferred interest dues on the spectrum that Vi had to pay in the future. The government got 16.13 billion equity shares in the company at Rs 10 each.




Read More - How Vodafone Idea Benefitted from Govt Scheme and added 4G Users

At the time of writing this, Vi's shares are trading at Rs 13.05, meaning more than 30% profits for the government. Note that the stock also touched a 52-week high of Rs 15.07 in November. This led the Department of Telecommunications (DoT) to ask DIPAM (Department of Investment and Public Asset Management), whether some part of the government's stake can be offloaded into the market.

As per an FE report, the DIPAM has made it clear that the government doesn't intend to sell any part of its stake in Vodafone Idea. The officials have said that the government is invested in the company for the long term. Vi is expected to finalise fundraising with potential investors before the end of this quarter. With about a month remaining for the year to end, Vi is likely to miss out on raising funds this quarter, according to an ET report.

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The final terms of the fundraising have not been locked yet and that could mean a further delay in fundraising for Vi. The telco needs funds to invest in 4G and increase its 4G subscriber market share. For the last few quarters, Vi has continuously been adding 4G subscribers, but the pace at which the addition is happening isn't great. Further, while other telcos have reached almost all parts of India with their 5G, Vi is yet to finalise a roadmap for the same.

Reported By

Tanuja is a passionate technology and telecom buff who has been following the telecom industry for several years now.

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