According to the Telecom Minister, Vodafone Idea promoters must infuse money as conversion won’t bring capital
- ByStartupStory | January 21, 2023
The promoters would need to inject money, according to Telecom Minister Ashwini Vaishnaw, who stated on Friday that Vodafone Idea will undoubtedly need capital, either in the form of stock or debt, to remain operational.
In an interview, Shereen Bhan on the sidelines of the World Economic Forum in Davos, Vaishnaw stated, “Vodafone needs capital. And capital has to come either in the form of equity capital or debt capital. Conversion is a non-cash transaction and non-cash transactions are not going to bring capital.”
He claimed that in order to ensure that Vodafone Idea has sufficient funding and thrives, the government works closely with the company’s shareholders.
“This is a very complex issue and I wouldn’t like to comment more than this but certainly we are engaged very closely with the current shareholders, and are making sure that enough capital is brought into the company so that it survives.”
The government approved the conversion of unpaid govt dues into equity for telecom businesses in September 2021. However, the government remained steadfast in its pursuit of further funding from the company’s proprietors, maintaining that stock conversion would be considered after such funding, but no clear commitment has yet been made.
Earlier this month, Vi founder and Chairman of the Aditya Birla Group Kumar Mangalam Birla met with Minister Vaishnaw to discuss the issue.
Vaishnaw addressed the Vodafone issue as well as the current situation of the Indian economy, particularly the business climate. According to him, investors are once again expressing increased interest in India as a result of their confidence in the country’s economic story. He credits the steady economic decisions and policies of Prime Minister Narendra Modi for this rise in confidence.
Vaishnaw further emphasised that by concentrating on the telecom and railroad sectors, the government was successful in luring investment bids worth Rs 5,000 crore. He thinks that this is a fantastic chance for foreign investors to view India as a constant growth story, with the potential for healthy and regular growth of 6–8 percent over the following 10 years.
In addition, he pointed out that India’s digitization efforts had received high accolades at the Davos meeting, with the nation being viewed as a hub for talent and innovation. A Vedanta-Foxconn facility, which is expected to be operational in 14–16 months, was also revealed by Vaishnaw.
The Minister also spoke about the necessity to balance risks in the railway business for both the government and the private sector and made plans to concentrate on risk allocation in the industry.
In addition, he said that India will start exporting railroads in the next three years and that the government is considering adding new industries to the Production-Linked Incentive (PLI) programme.
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