Vodafone Idea: US-based Tillman Global offers $6bn investment plan
Vodafone Idea (Vi) faces a potential $6 billion investment from Tillman Global Holdings (TGH), promising a major turnaround. The deal hinges on the Indian government providing a comprehensive relief package for Vi's massive AGR and spectrum dues. This investment could shift Vi's ownership, potentially reducing the government's significant stake and reshaping the telecom sector.
New Delhi: Vodafone Idea (Vi), the third largest telecom company in the country, has been facing a deep financial crisis for a long time. The company has so much debt that there is always a question mark about its future. But now it seems that this loss-making company is going to get a huge support. According to The Economic Times report, a large US-based investment firm Tillman Global Holdings (TGH) is considering making a heavy investment in the debt-ridden firm. This investment can be worth up to 6 billion dollars, which in Indian currency is worth about Rs 53,232 million.
It's not just about investing. According to the report, TGH will not only invest money, but can also take over the ownership rights of this telecom company. This news can prove to be a big change in Vi's millions of customers and the telecom sector. But there is one big condition of this deal, which is directly related to the Indian government.
This big and life-saving investment will be possible only if the Indian government gives Vi a concrete and comprehensive relief package to settle all his huge liabilities. This is the biggest 'twist' of Vodafone Idea's possible deal. The company has huge dues related to Adjusted Gross Revenue (AGR) and spectrum payments. TGH wants the government to make a clear plan to resolve all these dues. Simply put, the investment of the TGH will depend on the government's relief package.
If sources are to be believed, if this deal is confirmed, then TGH will become the promoter of this company. This means that the current control of Vodafone Idea will pass from the hands of its promoters — Aditya Birla Group and Vodafone Plc of the UK — to the TGH. This would mean a complete change in the management and ownership of the company.
Will the government lose 49% stake in Vi?
The biggest and most interesting question related to this deal is what will be the role of the Indian government? At present the Indian government is the largest shareholder of Vodafone Idea. The government's stake in the company is about 49%. This stake came after the company converted its liabilities into equity during the crisis.
If the deal between TGH and Vodafone Idea is finalized, then first of all the Indian government will not have any control over the company. However, the government can remain as a small and passive investor in this company. This will simply mean that the government will not interfere with the company's everyday decisions and strategies.
TGH wants ‘restructuring', not waiving dues
According to the report, the demand of the TGH is not to completely waive off the dues. The firm's intention is to restructure these liabilities in such a way that the company can get financial relief for a while and it can focus on its services. The TGH has also submitted a detailed proposal to the government in this regard.
TGH has a lot of experience and expertise in helping telecom operators out of distress. Its Chairman and CEO Sanjeev Ahuja is credited with rescuing French telecom giant Orange (Orange) during 2003-2007. TGH already invests in fast-growing sectors such as digital and energy transformation and has stakes in telecom infrastructure (such as fibre and tower assets) in many countries.