Government has no interest in acquiring any telecom company: VIL CEO
It may end up holding a sizable chunk (26% to majority stake) in VIL at the end of moratorium period, observe experts
New Delhi: The government has given an option to telecos to pay back interest on dues through equity and also conveyed that it has no interest in acquiring any telecom company, a top official of debt-ridden Vodafone Idea said.
Vodafone Idea Ltd (VIL) Managing Director and CEO Ravinder Takkar in an interview said: It's clear that the government wants the company to compete in the market and there should be at least three private service providers in the telecom sector. I have had many interactions across various parts of the government leading up to this announcement (telecom reforms).
In all my conversations, it is absolutely clear that the government has no interest in owning or acquiring or running any other telecom company," Takkar said.
The government is already managing loss-making telecom firms BSNL and MTNL, which are yet to post profit after a relief package of around Rs69,000 crore granted to them in October 2019. Some experts contended that the government may end up holding a sizable chunk (estimates varied from 26 percent to majority stake) in VIL at the end of moratorium period, if the telco opts to pay cumulative interest or annual instalments by way of equity. "They (government) have absolutely made it clear that they want three private players to remain. They want us to compete in the market. They want us to operate in a competitive manner," Takkar said.
VIL had total gross debt of Rs 1.91 lakh crore, excluding lease liabilities and including interest accrued but not due, as of June 30, 2021. The debt comprises deferred spectrum payment obligations of Rs 1.06 lakh crore and AGR liability of Rs 62,180 crore that are due to the government and debt from banks and financial institutions of Rs 23,400 crore.
The company had posted consolidated revenue of Rs 9,152.3 crore during the April-June period and the finance cost was Rs 5,228.4 crore. According to Jefferies, the 4-year moratorium on payments will offer VIL cashflow relief and "could lead to the government taking up sizable stake in VIL".
