India owns 35.8% stake in Vodafone Idea after tax change - TechCrunch
Vodafone Idea on Tuesday said it is giving the Indian government a 35.8% stake in the company after its board agreed to convert spectrum auction taxes and allowances into parity to become the third largest telecom operator in the world. save a country from falling apart.
The operator, a joint venture between British telecommunications group Vodafone and local billionaire conglomerate Kumar Mangalam Birla, has been trying to avoid a collapse for several years after the arrival of Reliance Jio, which eliminated its competitors by Free data and calls offer.
In addition, Vodafone Idea owed New Delhi approximately $ 6.76 billion. Following the change to parity, Vodafone Group's share will be reduced to 28.5% while Aditya Birla Group will decrease to 17.8%. The Indian government is going to be the largest shareholder in the wireless telecommunications operator.
Shares of Vodafone Idea fell more than 19% on the news and traded at ₹ 11.9 (16 cents) each at 2:30 am local time.
Bharti Airtel, the second largest telecommunications operator also indebted to the government, said last week that it will not change the interest on spectrum-related delay payments and government taxes to equality. His shares have largely remained flat today.
Tuesday's news comes months after the Indian government gave operators more time to pay taxes on a two-decade controversy last year. The Indian government and telecommunications operators have been debating for a decade how total revenue should be measured. The government has mandated that operators must pay the license fee and spectrum as a proportion of their income. Telcos had argued that only basic income from the use of spectrum should be considered for measuring adjusted total revenue.
The rescue plan, however, was crucial for the two telecom operators injured by Jio's arrival, run by Asia's richest man, Mukesh Ambani, who became a major telecom operator Indians with over 400 million registrars in just five years.
Many private phone operators have left the market, joined competitors or filed for bankruptcy in recent years while Jio was attracting subscribers. Vodafone Idea has not reported annual profits since 2022.
Airtel and Vodafone Idea had demanded relief from their $ 14 billion in government, a claim rejected by the Indian Supreme Court last year. Vodafone Idea officials said in September last year that the company hoped to successfully raise money to pay the taxes.
Analysts expected Vodafone Idea not to have to narrow down their fees to parity. “With the recent ~ 20% tariff increases and Vi have been likely to tie up money to repay non-convertible debt which is maturing between December 2022 and by February 2022, his plans have come to fruition. In our view, Vi is likely to continue its fundraising efforts from promoters and other investors rather than allow the government to play a significant role, "the bankruptcy firm said. IIFL Monday.