New Delhi : Delay in securing a crucial fund from Vodafone Idea Ltd. 5,000-7,000 crore from its promoters after equity conversion approved by the government. has created concern among top officials of the Department of Telecom.
According to people familiar with the department’s views, officials have expressed disappointment over the inability of Vodafone Idea’s promoters to infuse funds into the ailing carrier, despite assurances.
“They are working on a plan. The promoters should put 5,000-7,000 crore at least, but despite their commitments nothing has happened… It is disappointing,” said an official on condition of anonymity.
Officials are concerned about Vodafone Idea’s ability to raise funds from outside sources when funds from the promoter entities are yet to flow in.
On 4 September 2021, the board of Vodafone Idea approved the proposal to increase the 25,000 crore from outside investors. In March 2022, Vodafone Group Plc and Aditya Birla Group, the promoters of the debt-laden carrier, infused Rs 4,500 crore, but have not infused any fresh capital since then.
Funding constraints have also hit carriers’ ability to introduce 5G services, while rivals Reliance Jio and Bharti Airtel have moved ahead with rapid rollouts, aiming to complete urban area coverage by the end of the year.
A second official said the carrier was generating funds to pay its quarterly dues with interest, but a far more significant amount was needed to upgrade its network. These issues have been part of inter-departmental discussions over the past few weeks even as the company is working on a revival plan.
In a May 10 interview, Telecom Secretary K.K. Rajaraman said Vodafone Idea was in talks with banks and financial institutions and would share its revival plan with the government in a month.
“We hear they are working with banks and financial institutions. Hopefully they will get back to us with a revival plan, probably within a month. We keep getting monthly reports on their customer base and other parameters , but we want him to come back with resources – equity and debt – and we await final communication from him. And now that Mr. Birla is back on board, I hope he comes back with his plan very soon. Together we will return,” he had said, referring to the return of Aditya Birla Group chairman Kumar Mangalam Birla to the board of Vodafone Idea. Rajaraman also mentioned that Vodafone Idea’s 5G rollout plans were directly linked to the funding.
A spokesperson for Vodafone Idea did not respond to queries seeking comment. Queries sent to the Department of Telecom did not elicit any response till Sunday evening.
The government became the largest shareholder in the country’s third largest but loss-making telco by taking 33% stake in return for interest on outstanding dues of over Rs. 16,100 crore that the carrier has to pay to the government as spectrum charges and to adjust the gross revenue from previous financial years.
Vodafone Idea opted for conversion to equity in January 2022. The government implemented the agreement on 7 February but clarified that it would not be part of the board and would not interfere in the daily management of the carrier.
Officials said the DoT, however, closely monitored other parameters like subscriber base and quality of service and 5G rollout, which come under its purview as a licensor.
catch all corporate news And updates on Live Mint. download mint news app to receive daily market update & Live business News,