HomeBusinessGovernment won't sell stake in Vodafone Idea - Times of India

Government won’t sell stake in Vodafone Idea – Times of India

NEW DELHI: Despite opportunities of a windfall, govt has decided against diluting its stake in Vodafone Idea as the company, which has seen a surge in its share prices over the past few months, takes final steps towards fund-raise that will take place on Feb 27.
At 33%, govt remains the largest shareholder in the company, ahead of industrialist Kumar Mangalam Birla’s Aditya Birla Group and Vodafone Plc of the UK.However, govt feels that the “time has yet not come to do full or partial divestment” of its stake, especially as the funds that the company will get are to be used for launch of 5G services and pare debt.
“There are no plans to liquidate govt’s holding in the company,” sources said, adding that any call on this front will be taken “only at a later date.” Govt feels that the company should first work out a credible revival plan before it decides on an exit.
Vodafone Idea, which has a debt of nearly Rs 2.2 lakh crore and is reeling under steep losses, has, however, seen its share prices go up by over 150% in the past year ever since govt decided to pick up stake in lieu of future interest outstanding it had to get. Against a closing share price of Rs 6.85 on Feb 3 last year when the govt entered, Vodafone Idea’s scrip closed at 17.5 on Friday.
For the govt, this translates into a handsome return. It had taken a massive risk when it bought the shares at a per piece price of Rs 10 last year (even though the market price then was Rs 6.85) as the Companies Act mandates that equity can be purchased no less than the par value.
Vodafone Idea had on Feb 22 announced plans for a fund-raise, which analysts believe is the first step towards a “multi-billion-dollar infusion” for the company that has also been losing customers to rivals Reliance Jio and Airtel.

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