Economy

Government becomes the largest stakeholder in Vodafone; has no plans to be part of the operations.

Amongst panic that the company will become a white elephant PSU; the government clarified that it has no plans of being a part of the operations and will exit as soon as the company stabilizes.

The centre is set to receive a 35% ownership in the debt-laded Vodafone-Idea telecom company in lieu of the interests owned by them and as a part of the revival process for the ailing company. With the centre’s 35% stake, the Vodafone company will see a drop in stake from 44% to 28% and the Aditya Birla group will see its stake drop from 27% to 17%. The interest pay-out on the delayed payments on the spectrum was about 16,000 crore which the board decided to give as equity to the Government.

Vodafone-Idea have been constantly bled in terms of market share and revenue since the 2016 market disruptive launch of reliance JIO which offered data services at very low rates. The strategic telecom sector had at least a dozen players before 2016 with the prospects of it becoming a duopoly imminent if the Vodafone-Idea group goes bankrupt.

However, the Government has clarified that the company will not become a PSU and it will have no role in its operations with it exiting soon after the company stabilizes. “These three companies will not become PSUs. These three companies will continue to be managed as professionally run private companies,” Telecom ministry said in a statement.

According to sources, the plan was to support the strategic and ailing telecom sector by bringing in liquidity and making investors gain the confidence to invest in them. No voting rights or a place in the board will be taken by the government.

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