The Department of Telecommunications (DoT) has asked Vodafone Idea (Vi) to come back to it with a business plan soon in light of its decision not to launch 5G services for now (unlike its competitors Reliance Jio and Bharti Airtel) and in view of its assessment of the possible impact of BSNL’s impending launch of 4G in a few months and then 5G by August 15.
"We are worried about Vi as we want to have three private players and one government player in the market.
"The global trend now is to have two to three players.
"The conversion of its Rs 16,000 crore dues to the government to equity as part of the government package was linked to various things that Vi had to achieve for the conversion to take place. It was not automatic” said a top DoT official.
Any further delay in the conversion of dues to equity (the government will get a third of the shareholding in Vi but without a board seat) could have a serious impact on Vi.
The banks have made it clear that they will look at its loan proposals only after the government’s conversion of Vi’s dues into equity is done.
Vi’s management has also made it clear in analyst calls that it will roll out a 5G network once its funding arrangements with banks, and talks with telecom equipment vendors, have been finalised.
The company has bought limited 5G spectrum across some circles but has been sceptical about use cases for 5G being adequately developed, even though various experiments have been made.
Ravinder Takkar, Vi chairman, has said in an interview when he was CEO that if Vi has bought 5G, it is because it is more efficient as spectrum than 4G and will be used to support and strengthen its 4G services.
The DoT official also said that the department has been prodding the company to settle its dues with vendors.
Vi has bought time to pay its dues and give comfort to the American Tower Corporation by issuing the latter optionally convertible debentures of Rs 1,600 crore, which can be converted to equity at par.
Vi is also in talks with Indus Towers which has asked Vi to pay its dues of Rs 7,000 crore by November or face action.
The official also said that the DoT is looking at Vi’s efforts to raise Rs 20,000 crore of fresh funds and whether the promoters will pump in more money or not.
Asked whether the DoT has a contingency plan if the Vi turnaround plan does not work out and the conversion does not go through, the official said that remains to be seen.
