Modi govt against merger of Vodafone Idea, MTNL-BSNL - Reports

The government is reportedly against merging Vodafone Idea with MTNL and BSNL.

Due to multiple logistical reasons, the Centre may outrightly reject any proposal suggesting a merger of the debt-laden telco with state-run companies, which too have had a poor record of business management and need recurring government bailouts, Times of India reported, citing sources.

"How can we even allow this. It’s almost like having privatisation of profits, and nationalisation of losses?" a senior officer told the publication. Kumar Manglam Birla, the chairman of Aditya Birla Group, had earlier written to the government saying that he was ready to “hand over stake” in Vodafone-Idea (Vi) to a government entity.

He said that, with a “sense of duty” towards 27 crore customers, the telecom giant was willing to hand over its stake to Public Sector Unit (PSU), a government entity or a domestic financial entity.

"Happy to work with the government to urgently explore all possible solutions, without consideration of our private interest," he said.

mid an existential crisis facing the firm over Rs 50,000 crore unpaid dues towards the government, Birla also recently stepped down as chairman of Vodafone Idea Ltd.

The company's total gross debt (excluding lease liabilities and including interest accrued but not due) as of June 30, 2021, of VIL stood at Rs 1,91,590 crore, comprising of deferred spectrum payment obligations of Rs 1,06,010 crore and adjusted gross revenue (AGR) liability of Rs 62,180 crore that are due to the government.

Vodafone Idea is in the worst situation. Its net losses for the September quarter stood at a record Rs 50,922 crore whereas Airtel is far better.

By the end of FY 2021, BSNL's total arrears are Rs 81,156 crore. The total arrears of MTNL were Rs 29,391 crore, Minister of State for Telecommunications Dev Singh Chouhan had said in the Rajya Sabha while answering a question.

Vi is the third largest telecom company in India. As per the information received, Vi currently has a debt of Rs 1.8 lakh crore. The company has also slashed AGR of Rs 58,254 crore. Out of this arrears, Vi has so far paid only Rs 7,854 crore.

Both Aditya Birla Group and Vodafone have reportedly indicated that they are not interested in investing more into the merged entity if no help comes from the government.

In the absence of any financial support from parents, and with the kind of losses that the telco is making, it would be nearly impossible for it to continue operations for long, and might soon file for insolvency.