Vodafone Idea: Government Not Interested in Buying Out Birla’s Stake

The government has absolutely no plans of making the investment in Vodafone Idea for now and has kept quiet about Birla’s proposal. Even if the government purchases the sake of the Aditya Birla Group in Vodafone Idea, the Vodafone Group Plc would still be the spearhead owning the largest stake in the company.

Highlights

  • The government has absolutely no plans of making the investment in Vodafone Idea
  • Vodafone Idea hasn’t been profitable since the merger of Vodafone and Idea Cellular
  • Vodafone Group Plc would still be the spearhead owning the largest stake in the company

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Vodafone Idea
The Aditya Birla Group’s chairman, Kumar Mangalam Birla, has been in the news for the last few days because of his letter to the Union Cabinet’s Secretary. The Indian business tycoon had expressed his willingness to sell his promoter stake in Vodafone Idea (Vi) to the government. But according to a recent report from ET Telecom, the government might overlook the request made by Birla.

The Department of Telecommunications (DoT) might soon come out with a relief package for the ailing telecom sector. But the government isn’t planning on purchasing the minority stake in Vodafone Idea Limited (VIL).

Vodafone Group Plc Would Continue to be Majority Stake Holder

A person aware of the matter told the publication that the government has absolutely no plans of making the investment in Vodafone Idea for now and has kept quiet about Birla’s proposal. Even if the government purchases the stake of the Aditya Birla Group in Vodafone Idea, the Vodafone Group Plc would still be the spearhead owning the largest stake in the company.

Further, the person added that the Vodafone group has not communicated about the same with the government in any manner. The official said that the government’s hands are quite full with Bharat Sanchar Nigam Limited (BSNL) right now. The Indian government has already announced a Rs 70,000 crore relief package for the state-run telco.

This signifies that the government isn’t too interested in owning yet another loss-making telco. There is already BSNL that the government is struggling to revive, and on top of that, if Vi also comes into the picture, it would become too difficult a situation for the government to handle.

Vodafone Idea hasn’t been profitable since the merger of Vodafone and Idea Cellular. The telco is in deep trouble and needs cash anyhow to manage operating expenses and keep expanding the network. Further, there is a ton of debt that Vodafone Idea needs to clear out; and all of this has contributed to the telco not getting an investor.

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