DoT Unlikely To Purchase Stake In Any Telecom Operators: Here's Why

The Department of Telecommunication has recently announced reforms for the telecom sector to improve its financial condition. However, the government has also cleared that it has no plans of acquiring any telecom operator. This development comes after several reports claim the DoT might buy a token stake in Vodafone-Idea.

"I have had many many interactions across various parts of the government leading up to this announcement (telecom reforms). In all my conversations, it is absolutely clear that the government has no interest in owning or acquiring, or running any other telecom company," Vodafone Idea Ltd (VIL) Managing Director and CEO RavinderTakkar was quoted by PTI.

Notably, the DoT is already taking care of two state-run telecom operators BSNL and MTNL. In fact, DoT announced Rs. 69,000 crores relief package for both telecom operators. On the other hand, some analysts said that the government might purchase some stake in the merged entity after the moratorium period.

"They (government) have absolutely made it clear that they want three private players to remain. They want us to compete in the market. They want us to operate in a competitive manner," Takkar added.

For the unaware, Vodafone-Idea has to clear dues worth Rs. 1.91 lakh crores. The debt includes AGR, spectrum, dues to banks, and other financial institutions. The AGR liability of Vodafone-Idea is close to Rs. 62,180 crores and debt of banks and financial institutions are close to Rs. 23,400 crores. The telecom operator reported a revenue of Rs. 9,152.3 crores in the first quarter of the financial year.

"Our intention is to pay back to the government and our business plan will reflect that part. But certainly having that option where that could be converted into equity is a bold move and in a way ensures that if the industry is not fixed then the government will continue to support the industry for a longer period of time as long as it needs to be," Takkar further said.

It is worth noting that Vodafone-Idea is in a deep financial crisis and recently announced reforms are likely to help the telco as the government wants three telecom operators in the industry.