Vodafone Idea is confident it can reach a fundraising deal with potential investors, bolstered by a federal government package that provides much-needed relief to the debt-ridden mobile carrier, its chief executive officer said on Wednesday.
Investors were waiting to see whether New Delhi would ensure that at least three players exist in the telecoms sector and also wanted the funding to be used for business rather than paying government dues, said Ravinder Takkar, the CEO of Vodafone Idea.
This is the boldest step the government has taken. The moratorium for 4 years and the BGs (bank guarantees) which have been onerous on the industry. We (Vodafone Idea) would have approximately Rs 23,000-25,000 crore of BGs sitting with the government at any given point in time. It is just a piece of paper and not that it is cash and these steps have removed the stress.
The government has sent a message that this is an important sector, important for digitization of the country, has a huge impact on growth and digitization of the economy and they are willing to make changes for growth of the economy.
Second part is competitiveness in the sector. They (government) want three private players to continue, even though they have talked about more players, but definitely three players in the market have to stay. They do not want a duopoly and certainly do not want a monopoly in the sector. It is critical for the country and government that there are three (private) players.
There is no doubt that this company will survive and not only will it survive, it will do well and also compete in the market. It was always our conviction but not always understood by other market participants, said VI CEO.
The government has said to invest in the company, after you have spent on expenses, and become more competitive. We can invest in coverage, improving customer experience, improving services, digitization of services. This will make us more competitive and focused.
We have been engaged in fundraising for a while and while there has been interest, there have been concerns on if the government is serious about a three-player market, is there going to be enough competition in the sector.
Now with the package, it paves the way for more investments to come in. Those investments will be invested in the company rather than pay off the government which was part of concerns that the investors had – that I am going to invest but it will not be invested in the company but go in paying dues to the government.
Thakkar also added, Our networks are already here and there are future 5G auctions.