As a last resort to save Vodafone-Idea, the Chairman of Aditya Birla Group, Kumar Manglam Birla, has put forward the proposal to hand over his shareholding in the company to any public sector entity.
This surrender is an effort to save the company from crumbling after it has been declared cash-strapped.
In exchange for giving up his shareholding, Birla has demanded clarity on Adjusted Gross Revenue (AGR) liability, a moratorium on spectrum payments, block predatory pricing from competitors, and a floor price on tariffs. According to Birla, no investor is willing to put their money into the venture without clarifying these terms.
In his letter to the cabinet secretary Rajiv Gauba in June, Birla mentioned his intention of handing over his stake in the company as the group can no longer fund the venture.
“It is with a sense of duty towards the 270 million Indians connected by Vodafone Idea, I am more than willing to hand over my stake in the company to any entity – public sector/government /domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” he wrote.
The news of the company’s shares being relinquished by the majority shareholders came out on July 26, calling any strategic investor interested in taking over.
Earlier in a letter on June 7, Birla, who owns 27 percent of the company, wrote that it would collapse without any prompt support from the government.
Since the announcement, the company lost more than Rs 2,700 crore in market cap on Tuesday. Even with the IT and consumer goods firms’ stocks shoot up with an uptick, the Vodafone Idea stocks crumbled 12 percent. This crash led to a 52-week low before it started improving moderately.
According to a PTI report, Vodafone Idea has paid Rs 7,854.37 crore out of its Rs 58,258 crore adjusted gross revenue liability.
In deferred spectrum, payment obligations, the company also owed Rs 96,270 crore as of March 31, 2021. In addition to this, to banks and other financial institutions, the company owed Rs 23,000 crore.
The Supreme Court in September last year granted the telecom companies ten years to pay their pending dues to the government in 10 percent installments every year.
Bharti Airtel, Vodafone Idea, and Tata Teleservices claimed that the government’s calculation of their rights had errors and filed an application seeking corrections. The Supreme Court rejected the applications in July by Justice L Nageshwara Rao.