Vodafone merged with Idea. But the company’s fortune have not changed even after that.
In recent news, ATC (American Tower Company) converted its OCD (Optionally Convertible Debentures) to shares.
Earlier, Government of India had converted its dues into equity and has a 33% stake in the company now.
The company is heavily debt laden. It owes 2.1 Lakh Crores to various debtors and has another obligation of 1.38 Lakh Crores as spectrum fees payable to Government of India. Other than that it has a 69,020 Crore liability to Government on AGR (Adjusted Gross Revenue Liability), the fees it has to pay as revenue share to Government, which it is collecting or has already collected.
It has to service 5.4 Lakh Crores in 2024 itself.
There is news that Government of India could convert its dues into equity and then become a 70% owner of the company.
The effect of this will be that;
- Government will then owe to itself 70% of income.
- It will, for all practical purposes become a Government company while Government has been reluctant to support BSNL, its own PSU, for even a 4G Roll out.
- Government will then owe money to various debtors including Indus Tower, which is owned by Bharti Airtel and will have to service that liability.
By allowing Vodafone Idea to survive, Government is risking people’s money on an almost dead horse. It is trying to keep the dead horse alive just to avoid duopoly of Airtel and Jio. It is conveniently ignoring BSNL, which has a better chance of survival given its past and the assets that it holds.
Finally, Government may merge BSNL and Vodafone Idea but not before it has sunk a huge amount of public money into trying to make the dead horse run.
We all are witnessing that this current government does not do anything unless the political party is paid money. The currently unfolding electoral bond saga clearly points to quid-pro-quo.
I am sure that if one was to analyze the data long and hard, the reasons for continuing to flog the dead horse will become evident.
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