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Govt Rescues Vi: India Now Telecom Giant's Largest Owner
20 Nov
Summary
- Government now holds 48.9% stake in Vodafone Idea.
- Supreme Court allows recomputation of AGR dues up to March 2017.
- Vi's survival hinges on capital infusion and network modernization.
The Indian government has become Vodafone Idea's largest shareholder with a 48.9% stake, a significant shift driven by the need to ensure sector stability and protect its investment. This development follows the Supreme Court's recent permission to recompute Adjusted Gross Revenue (AGR) dues up to March 2017, a move that narrowly avoids the company's collapse.
Vodafone Idea faced existential financial peril due to massive AGR dues and inadequate cash flows. The government's increasing equity stake, achieved through converting deferred dues and spectrum charges into shares, reflects a pragmatic approach to preventing a duopoly and safeguarding consumer interests and its own financial commitment.
While this intervention offers a critical reprieve, Vi's long-term survival hinges on its ability to secure substantial capital for network modernization, attract new investors, and regain market share. The government maintains it has no intention of becoming a majority owner or operating Vi as a public sector undertaking.
