The government is working on a revival package to save the telecom sector which is facing financial crisis. Under this, the officials of the Department of Telecommunications have been holding regular meetings for the last few days with senior officials of the telecom company Vodafone Idea. According to sources, Aditya Birla Group chairman Kumar Mangalam Birla, who resigned as the chairman of Vodafone India last month, met Communications Minister Ashwini Vaishnav on Wednesday. Apart from this, Telecom Company’s MD and CEO Ravinder Takkar and SBI Chairman Dinesh Kumara Khara also met Telecom Secretary Anshu Prakash on Wednesday.
According to information received from sources by Financial Express, most worrying for the government is the statement of the promoters in which they had said that they do not want any more equity in the company. DoT officials are trying to understand whether the position of promoters will change if the government announces a revival package for the sector. If the promoters do not change their stand, officials believe that Vodafone Idea’s problems are not going to be resolved for long and it may go to the government in a year or two. The government is trying to increase the investment in the promoters company with the revival package of the government.
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This is the plan of the government to revive the telecom sector
According to sources in the Department of Telecommunications, the blueprint related to the revival package may come out next week. The government is working on a revival package under which the adjusted gross revenue (AGR) of telecom operators can be reduced from 8 per cent to 6 per cent. For this, Universal Service Obligation can be reduced from 5 per cent to 3 per cent. Since the Telecom Regulatory Authority of India (TRAI) had given approval for this in January 2015 itself, the government will not have to take regulatory approval for this.
Operators will get a relief of Rs 3 thousand crore annually due to reduction of 2 percent in license fee. Apart from this, the government can extend the spectrum payments moratorium by one or two years. According to sources, the government is looking at relaxing foreign norms such as stopping scrutiny of sources of funds, which will make it easier for Vodafone Idea to raise capital from overseas markets.
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Vodafone Group has already refused investment in India
Vodafone Group CEO Nick Raid said in an analyst call on 23 July that Vodafone Idea is going through a tough phase and it is being given despite practical support, but now the group will not make any new investment in the Indian telecom company. Raid said that this is a very difficult time for Vodafone Idea and Vodafone Group will continue to provide practical support but will no longer invest in India.
In April 2020, Vodafone Group had invested Rs 1350 crore in the Indian telecom company. The investment was made as per the merger deal between Vodafone Group’s Indian arm and Idea Cellular in 2018. Under this, Vodafone Idea had to invest Rs 8400 crore in an Indian telecom company.
British company Vodafone holds 44.39 per cent stake in Vodafone Idea and Aditya Birla holds 27.66 per cent. Birla has already said that there will be no further investment in Vodafone Idea. In a letter to the Cabinet Secretary on July 7, Birla had proposed to sell his stake in Vodafone Idea to any public sector, government or domestic financial entity. After this, Birla resigned as the chairman of Vodafone Idea on 4 August.
(Article: Kiran Rathee)