Govt not to raise stake in Voda Idea, telco's job now to ensure it performs: Scindia
The government has no plans to increase its shareholding in Vodafone Idea (VIL) as it does not want the telecom operator to turn into a public sector undertaking (PSU), Communications Minister Jyotiraditya Scindia has said.
Sending out a strong message to Vodafone Idea, Scindia told PTI in an interview that it is now the telco's job to ensure it performs.
After the recent conversion of Rs 36,950 crore of outstanding spectrum auction dues into equity, the government now holds 48.99 per cent shares in Vodafone Idea Ltd. Prior to this, the government's stake was about 22.6 per cent.
It is pertinent to mention that any additional stake could potentially turn the company into a PSU - bringing it under the administrative control of the government which would then get to appoint the board. Also the company would come under the purview of CAG and other oversight bodies, under such circumstances.
“It is now their (VIL's) job to ensure that they perform. Government today has 49 per cent of the company. There is no intention for the government to make that into a PSU. So we will stick to 49 per cent,” Scindia said.
On his assessment of impact of dues conversion on VIL's health and future competitiveness, especially given wide skepticism that the telco may still struggle to meet future payment obligations, the minister said: “That question should be directed at VIL...it is now their job to ensure that they perform”.
Analysts have been saying that government relief to Vodafone Idea into through dues-to-equity conversion may ease near-term liquidity constraints for the telco, but that structural challenges remain for the operator with factors like stabilisation of subscriber base, tariff hikes, long-pending debt raise, and further relief on dues being vital for the telco's long-term survival.
On the issue of MTNL's default on bank loans, the minister noted that it has substantial land bank and informed that same will be monetised for clearing dues of banks and debt.
