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Business News/ Technology / Govt will look at right opportunity to pare its stake in Vi: Telecom dept secy
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Govt will look at right opportunity to pare its stake in Vi: Telecom dept secy

The Union government is the largest shareholder in Vodafone Idea, India's third-largest carrier, with a 31% stake.

India’s service, telecom, computer software & hardware, trading and automobile sectors are among the industries that have received the highest FDI inflow in the past few years (Mint)Premium
India’s service, telecom, computer software & hardware, trading and automobile sectors are among the industries that have received the highest FDI inflow in the past few years (Mint)

Barcelona: The government will look at the right opportunity to pare its stake in Vodafone Idea (Vi), Neeraj Mittal, secretary in the department of telecommunications, said as he welcomed the approval given by the cash-strapped carrier's board to a fund-raise proposal. 

"We'll have to examine everything, if there is an opportunity, there is a need for it, how do the next few months look like in terms of their operations," he said in an interview, adding that the government may not look at divestment immediately. 

The Union government is the largest shareholder in Vodafone Idea, India's third-largest carrier, with a 31% stake. 

Mittal said the government was looking for growth in the carrier, and hoping the firm will be able to sustain operations.

On Tuesday, the board of Vodafone Idea approved plans to raise 45,000 crore in equity and debt, including capital from its promoters. 

The loss-making telco said it will meet shareholders on 2 April to seek permission to raise 20,000 crore in equity, and complete the process by the end of the June quarter. Following this, the company will look to raise debt, taking the total amount of funding to 45,000 crore.

The carrier has a debt of over 2.1 trillion, most of it owed to the government from spectrum sales in the past years.

Mittal said the department was looking at enabling mechanisms for surrender of spectrum, including 3G, which is being shut down by carriers.

"By 2030, we will need another possibly 1-2 GHz of additional spectrum. So this is a continuous process and if there is an opportunity for refarming or surrendering, we will definitely look at it," he said.

Sector experts said surrendering of spectrum can significantly reduce telco liabilities, particularly for 3G spectrum, which was bought at steep prices and high interest rates. The freed spectrum can be refarmed and used for 6G services. 

The government has already laid out its 6G vision document which unveils plans to launch 6G services by 2030.

Mittal said the department of telecom was likely to bring out the first set of rules and regulations under the new telecom law in the next few months, but did not give a firm timeline. The new law was enacted in December last year, replacing three archaic laws.

The government is also aiming to conduct the next round of spectrum auctions early in the June quarter, the seniormost official at the telecom department said. Mint had reported earlier this month that the auction is unlikely to fetch over 10,000 crore, as most of the purchases will be for spectrum renewals in small quantities.

The government is unlikely to heed requests from the industry to give out satellite spectrum prior to execution of rules under the new telecom law. Mittal said that while the regulatory process will take time, the government will attempt to proceed with rules for allocation of satellite spectrum at the earliest.

The new telecom law - Telecommunications Bill 2023 - provides for allocation of airwaves for satellite broadband outside of auctions, a step away from the traditional practice of selling frequencies via auctions.

Asked about regulation of AI, Mittal said: "The role of AI is going to be very critical and the regulators also have to take note of the rapid changes that are happening. AI can be a double-edged weapon. 

We hope that it will be more on the positive side because all the applications we see here, make the networks more efficient, more secure, more responsive to the emerging needs -- making networks more energy-efficient, connecting consumers more efficiently, improving the quality of service, securing the networks, and preventing attacks."

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ABOUT THE AUTHOR
Gulveen Aulakh
Gulveen covers both corporate and economy, and policy sections of Mint. She also covers telecom, IT from the corporate side and disinvestment, finance ministry from the economy side. Gulveen finds the rare mix of sectors she covers to be incredibly interesting.
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Published: 29 Feb 2024, 08:09 PM IST
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