Vodafone Idea CEO insists government won’t control company

Following the news that Indian government is set to become the largest single shareholder on troubled operator Vodafone Idea, its boss reckons he’ll still be calling the shots.

Scott Bicheno

January 12, 2022

3 Min Read
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Following the news that Indian government is set to become the largest single shareholder on troubled operator Vodafone Idea, its boss reckons he’ll still be calling the shots.

The declaration was made at a press conference so we’re reliant on the Indian media for an account. “In all of our interactions with the government leading up to the package itself, and even after they announced the package, I think it has been very clearly stated by the government that they do not want to run this company,” reportedly said Vodafone Idea boss Ravinder Takkar. “They do not have the desire to take over the operations of this company. They want three private players in the market, they certainly do not want a duopoly or a monopoly.”

The fear of a duopoly or monopoly is presumably what caused the government to make the offer in the first place. While it seems unlikely the government will use its big stake in the company to do dramatic things such as deposing Takkar, it’s hard to believe it will be totally passive. Presumably it will have representatives on the board, to which the CEO reports.

“The government has been very consistent in telling us that they want the promoters to run this company going forward as well,” persisted Takkar. “I don’t expect that to be deviated, I expect them to continue with this position. I can also say that the VIL promoters, which is the Aditya Birla group and the Vodafone group will continue to manage and control the company and its operations as they have been doing in the past.”

To be honest, parts of this press conference come over more like a hostage video in which the speaker is forced to speak well of their captors. “The government had made this offer to the industry, to be supportive of the industry, and some of the challenges that the industry was facing. And we were thankful for that…” said Takkar.

He did go on to clarify the board situation. “There is no condition in the letter that the DoT has written to us in the option that we have chosen to convert this interest into equity, which allows for a board seat for the Government of India. So in that regard, the government has shown no intention, or they believe that they have no understanding in nominating any board numbers.”

Let’s see. The normal state of affairs is for a 35% owner of a company to have representation on the board. Furthermore, what recourse would the two smaller shareholders have if the government decided to unilaterally move the goalposts on this, or anything else, in future?

Let’s not forget, Vodafone Idea still owes the Indian government lots of money, which it has little prospect of paying off when it becomes due again in four years’ time. Given the precedent set, it’s not unreasonable to assume at least part of it will be paid with the handover of further equity. Surely the best solution would have been for the Indian state to take, say, a 49% stake in the company in return for writing off all the debts and creating a clean slate.

About the Author(s)

Scott Bicheno

As the Editorial Director of Telecoms.com, Scott oversees all editorial activity on the site and also manages the Telecoms.com Intelligence arm, which focuses on analysis and bespoke content.
Scott has been covering the mobile phone and broader technology industries for over ten years. Prior to Telecoms.com Scott was the primary smartphone specialist at industry analyst Strategy Analytics’. Before that Scott was a technology journalist, covering the PC and telecoms sectors from a business perspective.
Follow him @scottbicheno

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