Vodafone-Idea to be acquired by a US telecom giant soon? Verizon, Amazon, or Starlink in the race?

Inside the battle to save Vodafone-Idea

With the share price of debt-ridden mobile phone company Vodafone-Idea (Vi) booming to more than 20 percent in two weeks, market experts expect a US telecom giant is going to invest and take control of the Indian telecom company soon. The names of US telecom and internet giants like Verizon Communications Inc. and Amazon.com are heard in the Indian stock market as potential buyers of Industrialist Kumar Mangalam Birla-controlled Vodafone-Idea shares. The latest in this league of US giants eyeing entry into the Indian telecom market is X- promoter Elon Musk-controlled Starlink, say market experts, analyzing the talks between India and US top political leadership during the G20 Summit in New Delhi.

Previously, Reuters reported about the possibility of Verizon Communications Inc. and Amazon’s interest in investing in Vodafone-Idea, the debt-ridden mobile phone company’s controlling firm, promoted Kumar Managalam Birla preferred to keep their silence[1]. The previous month, Vodafone-Idea (Vi) shares were shuttling at the R.7.50 range, now the share price is crossed Rs.11.70 and market experts believe, if the Government of India which has more than 33% of shares in the firm agrees to the investment and takeover of US-based firm (expected to be Verizon), the share prices would cross to more than Rs.25 soon.

Vodafone-Idea having a huge tax due (AGR dues) of more than Rs.50,000 crore preferred to give its 33% shares to the Government of India, a few years back as part of a bailout package. It is widely believed that the Government of India likes to opt for a US company, rather than a telecom firm from the Middle East. Currently, Birla Group and British firm Vodafone have around 50% shares in Vodafone-Idea mobile phone company and 33% shares owning Government want to encash their shares for around Rs.30,000 crore to recover the tax dues.

According to the top officials in the telecom sector, a US telecom giant will first invest more than four billion dollars in Vodafone-Idea by taking some portion of shares from Birla Group and most of the shares of British firm Vodafone and the Government of India will sell their entire more than 33% of shares to the US telecom firm and ultimately the US telecom firm will get more than 51% shares in the debt-ridden Vodafone-Idea. This deal would ultimately lead to investment of more than 10 billion dollars by the US company, which is expected to be Verizon, say market experts.

After the Comptroller and Auditor General’s (CAG) findings, four years ago, the Supreme Court of India through various landmark judgments found out the huge tax evasion (AGR dues) dues of many mobile phone companies ranging up to Rs.1.43 lakh crores (around 20 billion dollars). As per the apex court’s order, the telecom firms were given 10-year installments to pay the huge dues and later Government of India came out with a bailout package to help the debt-ridden telecom firms.[2]

Reference:

[1] Amazon, Verizon may invest over 4 billion in Vodafone Idea: Report – Aug 20, 2022, HT

[2] Telecom AGR dues case: Supreme Court allows 10-year installment to pay the dues of Rs.1.43 Lakh crores – Sep 02, 2020, PGurus.com

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