NEW DELHI: A day after Vodafone Idea Ltd opted to convert interest on dues to government equity, the telecom operator on Wednesday said the government has no desire to run the company but wants its promoters to run it.
Addressing the press, managing director and chief executive officer of Vodafone Idea Ravinder Takkar categorically said the government doesn’t want a duopoly in the telecom sector.
“The government, through a letter from the Department of Telecommunications (DoT), has clarified that it does not want its nominee on the board. They have said there is no intention to nominate a person on to the board, we don’t expect it either,” informed Takkar.
“The government doesn’t want a duopoly in the market,” he added.
Following the decision of telco to convert interest on dues to government equity, the government now will own 35.8% stake Vodafone Idea. This makes the government the single-largest shareholder in Vodafone Idea, a joint venture between the Aditya Birla group and UK-headquartered Vodafone. The two existing promoters, Vodafone India and the Aditya Birla Group, will have a 28.5 % and 17.8% stake respectively in the company.
Takkar emphasised that the existing promoters will continue to manage the company. “We are committed to the business and decision making and will continue to guide it,” he said.
On the fund raising issue, Takkar said the telco has been engaged with the investors for several months now. He said the investors have shown deep interest in it. “I can confirm there is a huge interest from investors in the company, especially foreign investors," said Takkar.
However, he highlighted the three main concerns of investors: they want the government to have three players, support the reforms and also ensure there is enough liquidity in the sector.
On being asked the rationale behind the decision, the chairman said that given that most of the telco's debt is to the government, "It was clear to us that converting some of the debt to equity is a good option for the company to reduce its debt going forward.
Shares of Vodafone Idea surged over 7% at Rs 12.6 apiece on the BSE in Wednesday's early deals after the stock tanked nearly 21% yesterday.