Vodafone Idea Clarifies: No Update From Government On Potential Stake Offloading

Amid speculation that the government might be exploring options with sovereign funds to offload its stake in Vodafone Idea, the company stated on Tuesday that any decisions regarding its holding are entirely up to the Centre. Vodafone Idea has not received any communication from the government on this matter.

During Vodafone Idea's earnings call, CEO Akshaya Moondra clarified, "We have had no communication with the government. As a public shareholder, the government is free to make decisions regarding their investment, which is a separate issue."

Moondra also emphasised that whether the government maintains its shareholding or opts for gradual divestment is independent of its stance on converting dues to equity.

"The reform package was announced with the objective of saying support needs to be provided and the government is very clearly focused on having three healthy private operators... The conversion to equity was a means of supporting the balance sheet of the company by converting some debt into equity. I would say the policy of the government remains the same; what they do with their public shareholding is their decision... We as a company do not have any information or engagement with them on this subject," Moondra said.

Responding to another question on the impact of the recent tariff hikes on the ground, he said that while it is still early to draw a conclusion about SIM consolidation, given that the entry price increases this time have been minimal, the SIM consolidation could accordingly be relatively less.

He also noted an increase in user port-outs to BSNL following recent tariff hikes, and the company is closely monitoring this trend. However, Moondra believes that decisions to switch carriers based solely on tariff changes may not be long-lasting, given Vodafone Idea's extensive 4G coverage.

"One of the trends we have seen is that the port-out to BSNL has generally risen from pre-tariff increase levels, which is a space we are watching... and the reason for that is because they have not increased their tariffs so there is a fair amount of arbitrage," he said.

The VIL CEO, however, believes that any decision to port out purely on the basis of tariffs may not be sustainable.

"We are watching this space; our expectation is that customers who are used to having good coverage and experience of 4G coverage, probably the current offering of BSNL, may not be to that extent. As people who may have taken a quick decision in terms of tariff actions, they may most likely come back. But we will keep on watching this space and see what needs to be done," he said.

Vodafone Idea's net loss narrowed in the first quarter of fiscal 2025. It stood at Rs 6,432.1 crore in the June quarter, compared to a loss of Rs 7,665.9 crore in the same quarter of the last fiscal, according to an exchange filing on Monday. Analysts tracked by Bloomberg had a consensus estimate of Rs 7,639 crore.

Revenue decreased 1% year-on-year for the three months ended June to Rs 10,508.3 crore. Analysts had projected revenue of Rs 10,655 crore. The company's average revenue per user for the quarter stood at Rs 146.

The telecom firm said it is in the middle of expanding 4G coverage and capacity and launching 5G services after recent fundraising.

During this calendar year, the company raised equity funding of about Rs 24,000 crore, including Rs 18,000 crore via an FPO in April, Rs 2,080 crore via preferential issuance to an ABG (promoter) entity in May, about Rs 2,460 crore via preferential issuance to Nokia and Ericsson in July, and Rs 1,600 crore via the conversion of OCDs between March 2024 and July 2024.

"This equity fund raise bolsters our capex roll-out for building a top-quality 4G and 5G network to contribute towards India's digital transformation," the company said in its earnings release.

After these issuances, the promoters' shareholding stands at 37.2% and the shareholding of the government is at 23.1%.

(With input from PTI).