NEW DELHI: A day after Vodafone Idea Ltd (VIL) opted to convert interest on dues to government equity, the telco on Wednesday denied government’s taking over it or any role of government in its decision making body.
While addressing press managing director and chief executive officer Ravinder Takkar said that the government has no desire to run Vodafone Idea. In fact, it wants its promoters to run it.
“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.
He also mentioned that the government doesn’t want a duopoly in the Indian telecom market.
“They want three private players in the sector, not a duopoly. In all my personal interactions with the government, they have been very clear they do not want to run the company and do not want to take over operations,” he retorted.
Today’s announcement brought cheer for VIL as its shares started gaining and touched an intraday high of Rs 13.25, a day after it tanked 20%.
Its share opened at Rs 12.10 in today’s session against the previous close of Rs 11.80. Experts believe the reason for the debacle of VIL’s shares in the market on Tuesday was fear among investors that the government will take over operations of the company. Following the decision, the government became the single-largest shareholder with 35.8% stake 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 28.5 % and 17.8% stake, respectively in the company.
Takkar emphasised that the existing promoters, Aditya Birla Group and Vodafone Plc, will continue to manage the company.
There will be no interference from the government’s side at all.
“After the equity conversion, we both promoters will jointly hold 46.3% stake in the company… both promoters will continue to have high engagement, will involve and participate in all the decision making,” said Takkar. The rationale behind the decision of Vodafone Idea was its growing debt to the government.