Corporate Grapevine

Published: Jan 15, 2022
Updated: Jan 15, 2022

Swan song for VI owners

The Vodafone-Idea promoters have decided to throw in the towel and have offered a 35 per cent stake to the government.

This was after the Supreme Court ordered the company to pay Rs 55,000 crore in past dues. This is a lose-lose deal for all.

Apart from the government, the lenders are set to lose their money and so too the shareholders of the company. For both Vodafone and the Birla group, it is finally the last chapter of a jinxed merger deal.

The development will hit the Vodafone sentiment very hard as Birlas were not ready to pump in funds and were thinking of deserting the sinking ship.

Obviously, the immediate reaction of the market is bearish with the stock price of VI crashing 19 per cent. Investors ask whether the government which has miserably failed in managing BSNL and MTNL will be able to manage VI being the largest shareholder? Quips an investor, “how can we tolerate the government which is a total failure will own over 35 per cent equity while Vodafone will have 28.5 per cent and Birlas 17.8 per cent?”

However, observers note that viewed from a long term point of view the more will prove positive for the company which will remain in existence now and with the sharp drop in the debt burden will be able to recover the lost ground slowly and gradually. If the government does not interfere in the management of the company, the prospects for the financially strapped company will improve substantially in coming years, it is said.