JSW wants to acquire a stake in Vodafone Idea
What's the story
Vodafone Idea (Vi) is in talks with a number of investors, including Singapore's ST Telemedia and India's JSW Group, for a possible equity partnership. The move comes after the financially troubled telecom operator received major financial support from the Indian government, its largest shareholder. The discussions are still at an early stage and there's no guarantee of a deal being finalized anytime soon.
Investor interest
Tillman Global Holdings also interested in acquiring stake
Along with ST Telemedia and JSW Group, US-based Tillman Global Holdings has also shown interest in acquiring a stake in Vodafone Idea. Several large domestic business houses are also said to be interested, but their names remain undisclosed. The firm's management is expected to meet institutional investors in Singapore and Hong Kong on March 16 and 17 as part of these discussions.
Strategic partnership
Government on lookout for strategic investor to manage Vi
The Indian government, which owns a nearly 49% stake in Vodafone Idea, has been on the lookout for a strategic investor who can infuse capital and manage the company. The Aditya Birla Group and UK's Vodafone Group Plc are its promoters. However, it is still unclear if these promoters would sell their stake or if there would be a fresh issuance of equity.
Financial restructuring
Aditya Birla Group, Vodafone Group hold stakes in Vi
The government's stake in Vodafone Idea comes from converting some of its dues into equity. The Aditya Birla Group owns a 9.50% stake in the telco, while Vodafone Group holds 16.07%. Notably, if a strategic investor infuses ₹50,000 crore fresh equity into Vi, the government could convert ₹48,000 crore of the firm's spectrum liability into equity without increasing its stake beyond 49%. This would also reduce Vi's spectrum liability by 40%.
Investor impact
Government fast-tracking reassessment of statutory dues
The government is fast-tracking the reassessment of the company's statutory dues based on adjusted gross revenue, a process expected to be completed by March-end. This is being done so that the new investor has a clear picture of the liabilities when they come on board. It is estimated that dues would come down by 50-60% and would have to be paid after 10 years, giving sufficient breathing space for Vodafone Idea.