Vikram K Doraiswami, the Indian High Commissioner in the UK, has written to the finance ministry, asking about how to proceed in the matter of converting dues into equity for Vodafone Idea (Vi). The Indian government had given telcos, including Vi, an opportunity to convert their deferred interest dues into equity. Vi had accepted the offer, and over a third of the company was estimated to be given to the company against the removal of accrued interest dues. However, that was put on hold by the Department of Telecommunications (DoT).
According to an ET Telecom report, the UK India Business Council has written to Doraiswami about the matter and said that during the time of the offer, no such pre-conditions were made by DoT, and the delay in dues to equity conversion has hurt the fundraising activity of the company.
Further Delays to Hurt Vodafone Idea Even More
If there are any more delays, Vodafone Idea will be hurt even more, said the UK-India trade body. The DoT has asked the company for a new business plan which includes 5G rollout, and has also asked the promoters to infuse capital before the government picks a stake in the telco.
Vi’s promoters are reportedly ready to infuse additional capital, however, not to the extent that is required. Vi promoters are only looking at helping the telco with about Rs 3000 crore. This is remotely not enough to help the telco turn things around.
There are investors who want the government first to take a stake in the company before they put their money on the table. However, the government is not going to pick its stake until the time promoters don’t infuse additional capital. Then there are the promoters who don’t want to sink their legs further into the water with Vodafone Idea. Vi is in a tricky situation, and only time will tell what happens with the company. One thing is for sure; Vi needs funding in the short term to survive.