JSW, ST Telemedia among firms eyeing stake in Vodafone Idea

Synopsis Vodafone Idea is actively engaging with various investors, notably ST Telemedia and JSW Group, to explore a potential equity partnership. Following a recent financial boost from the Indian government, the company is eager to attract strategic backers who can provide much-needed capital for its ambitious 5G rollout. New Delhi: Singapore-based ST Telem ia and India’s JSW Group have joined a few domestic and global investors that are in discussions with Vodafone Idea (Vi) for acquiring a potential stake, people aware of the matter said. The investor interest in the loss-making and debt-heavy telecom operator comes after it received substantial financial relief from the Centre, which is also its largest shareholder. The talks are exploratory in nature and there is no certainty of a deal happening, the people told ET. Apart from these two, US-based Tillman Global Holdings is also in the fray, as ET reported earlier. Additionally, a few big domestic business houses are also vying for a stake, names of which could not be ascertained. “There are a few serious suitors for the company and simultaneous talks are going on with them,” one of the people said. The company’s management is scheduled to meet institutional investors in Singapore and Hong Kong on March 16 and 17. The government, which holds a nearly 49% stake in Vi, has been seeking a strategic investor who could put in capital and run the company. The Aditya Birla Group and UK’s Vodafone Group Plc are its promoters. “As of now, it is not decided if the promoters would sell their stake, or it would be a fresh issuance of equity,” said a second person. Queries sent to Vi, JSW Group, ST Telemedia, Aditya Birla Group and Vodafone remained unanswered at the time of going to press Friday. ET reported last September that the government was scouting for a strategic investor to invest $1 billion in Vi for a 11-13% stake. Live Events ‘Breathing Space for the Telco’ According to estimates by brokerage firm IIFL Securities, if a strategic investor infuses Rs 50,000 crore fresh equity in Vi, the government could convert Rs 48,000 crore of the company’s spectrum liability into equity without increasing its stake beyond 49%. It would also bring down Vi’s spectrum liability by 40%. The government’s stake in the company comes from the conversion of some of its past dues into equity. The Aditya Birla Group holds a 9.50% stake in the telco, while the Vodafone Group owns 16.07%. The government has expedited the process to reassess the company’s statutory arrears based on adjusted gross revenue and the process is likely to be completed by the end of March. The intent is that the new investor should have a clear idea about the liabilities when it comes on board. “It is expected that the dues would come down by 50-60% and the amount has to be paid after 10 years. This would give sufficient breathing space to the company, which can use the capital to invest in the 5G network,” said the first person. Apart from a strategic investor, the company is also exploring raising bank debt. Fresh funding is crucial for Vi to continue its network investments as the more than Rs 20,000 crore it raised in April 2024 through equity has been utilised. Its 5G expansion has been slowed down in recent months due to lack of funds. The company is providing 5G services in over 30 cities, but the coverage is limited when compared with rivals Bharti Airtel and Reliance Jio. Vi has consistently lost market share to its rivals and is a distant third with an about 17% share. Fresh funds will help arrest its slide and upgrade infrastructure in the tech-heavy sector. (You can now subscribe to our Economic Times WhatsApp channel) (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online. ...moreless (You can now subscribe to our Economic Times WhatsApp channel) (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online. ...moreless