Center inquires Vi for its business plan

In light of Vodafone Idea’s decision to delay the launch of 5G services for the time being (unlike its rivals Reliance Jio and Bharti Airtel) and in light of its assessment of the potential impact of BSNL’s impending launch of 4G in a few months and then 5G by August 15, the Department of Telecommunications (DoT) has requested that Vodafone Idea (Vi) return to it with a business plan soon.

Since the centre wants three commercial businesses and one government actor in the market, they are concerned about Vi. Two to three players are the current global trend. As part of the government deal, Vi had to accomplish a number of things before it could convert its Rs 16,000 crore in debt to the government into equity. A senior DoT official stated that it was not automatic.

Any further hold-up in the conversion of debt into equity, in which the government will receive a third of the company’s shares but not a seat on the board, might have a negative effect on Vi. The banks have made it plain that they won’t consider its loan requests until the government has converted Vi’s outstanding debt into equity.

Vi’s board has also made it evident on analyst calls that the company will launch a 5G network after finalising its financial agreements with banks and negotiations with telecom equipment manufacturers. Although the corporation has purchased a small amount of 5G spectrum in select circles, it is sceptical that enough use cases have been developed for the technology.

It was previously stated that Vi’s decision to purchase 5G was made because it is a more effective use of spectrum than 4G and will be utilised to complement and bolster its 4G services.

The DoT representative added that the division has pushed the business to pay its vendor debts. By offering the American Tower Corporation optionally convertible debentures worth Rs. 1,600 crores that can be converted into equity at par, Vi has acquired time to pay its debts and soothe the latter.

Additionally, Vi is in discussions with Indus Towers, which has demanded that Vi settle its debt of Rs 7,000 crore by November or suffer consequences. The insider added that the DoT is evaluating Vi’s efforts to raise Rs 20,000 crore in new financing as well as whether or not the promoters will contribute further funds.

When asked if the DoT has a backup plan in case the Vi turnaround plan fails and the conversion does not go through, the official stated it is still unclear.