Scripting a survival
Zee’s founding family plots a twist in the tale and stays in control
Vodafone Idea says investors are showing interest in infusing fresh funds into the cash-strapped company after the government recently announced a relief package for the telecom sector. The operator, which has been struggling to stay afloat due to inadequate funding, will soon approach the company’s board with a fresh proposal to raise money.
Speaking to BusinessLine, Ravinder Takkar, Chief Executive Officer, Vodafone Idea, said, “Our fund-raising efforts will be a game changing exercise and that will become much more viable due to the relief package. Earlier, investors were asking us, ‘what are you gonna do, are you going to turn around and take away the money and give it to the government?’ So that part has been cleared. Now, the fresh money can go into the company’s capital expenditure requirements.”
Vodafone Idea has been trying to raise funds for the past year but investors have been concerned about it future given that it had to pay over ₹50,000 crore in regulatory dues. The government recently proposed nine structural and five process reforms, of which the main one is the four-year moratorium on annual AGR and spectrum payments.
“The government’s actions signal that instead of paying the dues now, we can invest in the business, invest more in network, invest more in coverage, invest more in capacity and digitisation. This has been a huge vote of confidence for the investors also. From their perspective, the question was: Is the government serious about keeping competition alive? The government package has eliminated all those doubts,” Takkar said.
Awaiting guidelines
While the Cabinet has approved the relief package, the detailed guidelines are yet to be worked out. According to Takkar, the Finance Ministry, in collaboration with the DoT, is working on this and and the details are expected shortly. “Clarity on those is not very far off, just a matter of days and a couple of weeks that things will start happening,” he added.
“We will take those numbers, and work out our funding needs to stay competitive. We need to take it to our board for approval after that. I know that based on the initial response after the release of the package this serves as the opportunity for the investors to jump back into the fray and participate in funding,” he said.
On promoters
But the big question is if the existing promoters — the Aditya Birla Group and Vodafone Plc — will change their stance to not infuse fresh equity. Takkar said the relief package could change that. “The story that promoters are not supportive is not true. What they have always said earlier was — which is what other investors are also saying — that ‘we are not clear about the intent of the government’. I think the new package changes this. The promoters have a choice to participate in the fund raising. Whether they do or do not is a choice they will make... it is very difficult for me to speculate. But, certainly, I don’t see why fund-raising can’t be done, in either scenario, with or without them. We have got positive feedback from investors,” he said.