Thursday, January 20, 2022
EditorialsEditorial: Confusing signal

Editorial: Confusing signal

Published: 15th Jan 2022 12:00 am | Updated: 14th Jan 2022 10:41 pm

The change in the shareholding pattern in Vodafone Idea Limited (VIL), with the Central government becoming the largest shareholder with 35.8% equity, may have come as a rescuing act for the ailing telecom company but sends confusing signals. There are unanswered questions regarding the future role of the government in the company. One wonders what gains can be expected from the government owning one more company in a sector where its track record with BSNL and MTNL has been dismal. Since taxpayers’ money is at stake, the roadmap needs to be spelt out clearly. Already, the lopsided and faulty policies of the government in the past, including the infamous retrospective taxation, had deepened the crisis in the telecom sector. Vodafone Idea, the third largest telecom company, has now accepted the Department of Telecommunication’s proposal to convert its spectrum auction instalments and adjusted gross revenue (AGR) dues into equity, thereby making the government the largest shareholder of the company. The mounting debt of nearly Rs 2 lakh crore may be a key factor behind the telecom operator offering 35.8% equity to the government against the dues. But, it is unclear as to what the Centre hopes to achieve by hand holding a stressed company. There is bound to be criticism that the government is unduly doing this heavy-lifting—especially when its telecom companies have been bleeding it so far.

- Advertisement -

The telecom sector, especially a consumer-facing one, is now a technology-led sector which needs constant investments in innovation. The question is whether the government has the financial bandwidth to invest regularly, and more importantly, attract private sector talent. The government owning significant controlling or majority stakes in multiple telecom companies will only stress-test the elasticity of its bandwidth to govern each of those stakes. While the message through the heavy-lifting could be to prevent the telecom sector from becoming a duopoly of Reliance Jio and Airtel, Vodafone Idea would need to thrive and not merely survive in the volatile market. Improving network quality and investing in new technologies must be high on the priority list. Uncertainty, however, remains on its ability to meet enhanced payments to the government after the moratorium period ends. While this development indicates that the telecom sector would not end up in a duopoly as fears have been around, this does not necessarily mean that the brand would have sustained firepower to continuously invest in upgrading its technology, network, and consumer offerings. What it also means for its ability to attract talent is a question mark, considering that it won’t be an MNC employer brand, and might have a public sector approach to board governance. For a government that has repeatedly stated its intent to divest its stake in public sector entities, it is ironic that it should now end up with a stake in a private telecom operator.

Now you can get handpicked stories from Telangana Today on Telegram everyday. Click the link to subscribe.

Click to follow Telangana Today Facebook page and Twitter .

Also Read

- Advertisement -

Latest News

- Advertisement -