Centre has no immediate plan to sell Vodafone Idea stake, reviews Rs 24,700-cr FBG waiver demand

Vodafone Idea

The government has no immediate plan to divest its stake in Vodafone Idea (Vi) and a decision will be taken once signs of a turnaround in the telco are visible, sources told Moneycontrol, requesting anonymity. The government is also evaluating the request for a potential waiver of bank guarantees on upcoming regulatory dues of Rs 24,747 crore, they said.

“They (Vi) will have to inform the DoT about their internal accruals and how much of that has gone up. And what sort of financial burden they can take. As of now, they haven’t really shared any substantial update on their operations post the fundraising,” a senior telecom ministry official told Moneycontrol, adding that the telco is still in the early days of implementing its turnaround strategy.

The government's stake in the company came down to 23.8 percent from about 33 percent after the successful follow-on public offer (FPO) in April this year.

The official was responding to reports that the government has begun discussions with potential investors, including sovereign wealth funds, to sell its stake. In April, Vi raised around Rs 18,000 crore from retail and institutional investors, driving the stock up over 20 percent. The shares were trading at Rs 15.80 apiece on August 27.

Another senior official told Moneycontrol that the Department of Telecommunications (DoT) has also not taken any call on the telco's request for a waiver of a financial bank guarantee of Rs 24,747 crore for spectrum payments due in September 2025. According to spectrum auction rules, the FBG must be deposited one year before the due date.

“For any waiver, the DoT needs to evaluate their operations post the funding thoroughly and if their capex plan is on track and would bring desired results. As of now, there hasn’t been any decision on their request. We are still evaluating,” the second official said.

Vodafone Idea CEO Akshaya Moondra said in the August 13 post-earnings call that the telco was not in discussions with the government over any stake sale to sovereign funds.

“We have had no communication from the government, and to that extent, we have to say that the government, as a public shareholder, is free to make decisions with reference to its investments. That is an independent subject… Whether the government continues with their shareholding or divests gradually or whatever they may decide to do is independent of what their policy is... We, as a company, don't have any information or engagement with the government on the subject,” Moondra confirmed.

Vodafone Idea's total promoter holdings are 38.2 percent, including Aditya Birla Group’s 15 percent and Vodafone Plc Group’s 23.2 percent. The institutional holdings are 20.1 percent, while the non-institutional holdings are 17.9 percent.

The upcoming payments are for the spectrum that Vodafone Idea purchased in auctions conducted before 2022, when the debt-ridden telco opted for a four-year moratorium to pay for the spectrum under a relief package put together by the government.

Vodafone Idea is discussing securing debt funding for its comprehensive network expansion plan with a consortium of banks. The company aims to raise Rs 25,000 crore along with additional non-fund-based facilities of up to Rs 10,000 crore.

Moneycontrol had on June 11 reported that a consortium of lenders, led by the State Bank of India (SBI), gave in-principle approval for a Rs 14,000-crore loan to Vodafone Idea (Vi). The telco received informal commitments from several lenders, including Punjab National Bank (PNB), Bank of Baroda, Union Bank, and other public and private sector banks.

The proceeds will be used to repay operational creditors, roll out the 5G network, and bid for additional spectrum. After the successful FPO, the telco is aggressively pursuing its larger objective of raising Rs 25,000 crore.