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Union Communications Minister Expresses Concern Over Vodafone-Idea


Union Communications Minister Expresses Concern Over Vodafone-Idea

Union Minister of Communications Ashwini Vaishnaw has expressed the Centre’s concern over Vodafone Idea’s delays in raising fresh funds. 

According to reports, the struggling telecommunications company has been facing difficulties in securing both equity infusion from its promoters and funding from investors. 

Vaishnaw expressed his concerns, stating that the company’s revival is dependent on investments, and emphasised that the government is continuously urging the promoters to invest in the company. 

In an effort to address the situation, the government had previously converted Vodafone Idea’s interest dues worth Rs 16,123 crore into equity in February, following assurances from the promoters regarding their commitment to invest in the company. The recent appointment of Aditya Birla Group chairman Kumar Mangalam Birla to the telco’s board has also reignited hopes for accelerated fundraising efforts. 

However, Vodafone Group, which holds a 32 per cent stake in Vodafone Idea, did not indicate in its FY23 earnings statement that it intends to make further investments in the Indian telecom joint venture with the Aditya Birla Group. Furthermore, the British telecom group stated that it is no longer recording additional losses related to Vodafone Idea. 

As per the report, the government currently holds the largest stake in Vodafone Idea with 33.4 per cent, while the Aditya Birla Group holds 18 per cent. 

The delay in fundraising is not only impacting Vodafone Idea’s financial stability but is also causing a setback in the launch of its 5G network. While competitors Reliance Jio and Bharti Airtel are aggressively deploying 5G networks across the country, Vodafone Idea is facing obstacles due to the lack of funds. 

Vodafone Idea’s financial performance for the fiscal fourth quarter showed some improvement, with a narrowed net loss of Rs 6418.9 crore compared to the previous quarter. This improvement was attributed to lower interest and financing costs, as well as a slower rate of subscriber losses. However, the telco’s quarterly revenue experienced a slight decline of 0.83 per cent year-on-year, reaching Rs 10531.9 crore in the January-March quarter.  

The company managed to reduce churn and ended the period with 225.9 million subscribers, having lost 2.7 million during the quarter. Nevertheless, Vodafone Idea continues to lose market share to Reliance Jio and Bharti Airtel, both of whom gained subscribers. 

Vodafone Idea did manage to add 1.1 million 4G users, bringing the total to 122.6 million. Per capita data usage also saw a modest increase of 0.7 per cent to reach 15.1 GB. 

The report further mentioned that the government anticipates resolving the issue of satellite spectrum allocation and establishing the necessary procedures within the current year. 

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