(Bloomberg) — Vodafone Idea Ltd. will survive and is hopeful of successfully raising funds after the Indian government gave operators more time to pay dues to help the industry, the company’s chief executive officer said.
“Vodafone Idea will exist. We will compete. We will survive and thrive,” CEO Ravinder Takkar said in an interview Wednesday. “We were engaged in fund raising for several months. We have investors, international and domestic, who have shown interest in investing in Indian telecom industry.”
The concerns of investors over whether the government will ensure the existence of at least three private-sector players have been eliminated after last week’s telecom package, Takkar said.
A rescue plan was crucial for Vodafone Idea, a joint venture between the local unit of Vodafone Group Plc and billionaire Kumar Mangalam Birla, and India’s No. 2 carrier Bharti Airtel Ltd. Both saw their financial health deteriorate after billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd. sparked a brutal price war in 2016, and quickly clinched market share to become the top player. Many private phone operators exited the market, merged with rivals, or filed for bankruptcy after Jio lured away subscribers with cheap data and free calls.
Prime Minister Narendra Modi’s administration allowed mobile-phone companies to be fully foreign owned without needing government approvals and gave the firms four years to clear dues to the government. It will retain the option to convert the backfees into equity, if needed. Vodafone Idea is waiting for guidelines on the plan to finalize the fund raising requirement and business plan, Takkar said.
“I see a very different fund raising program in terms of energy and enthusiasm given the new telecom package,” Takkar said, adding investors were worried about their money being used to pay dues instead of it going to the company. “Nobody wants to participate in such fund raising program.”
Vodafone Idea, which hasn’t reported an annual profit since 2017, has announced plans to raise as much as 250 billion rupees ($3.4 billion). The funds could help the company win airwaves in a planned spectrum auction.
Takkar said the promoters have the choice to participate in the fund raising program. “I don’t see them abandoning the business,” he said.
(Updates with additional comments from CEO sixth paragraph onwards)
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
