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'Keeping telco alive immediate priority', Aditya Birla Group says no plans to buy additional stake in Vodafone Idea

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According to a report in ET, Aditya Birla Group's 'immediate priority' is to keep Vodafone Idea alive by quickly closing the pending fundraise.

'Keeping telco alive immediate priority', Aditya Birla Group says no plans to buy additional stake in Vodafone Idea

The Aditya Birla Group (ABG) has no plans to increase its stake in its telecom Vodafone Idea (Vi) from 27.66 percent by purchasing shares from co-promoter Vodafone Group, and its top priority right now is to keep Vi alive and running, reported ET.

Under the terms of the merger between Idea and Vodafone India, owned by ABG and UK-based Vodafone Group respectively, ABG can purchase shares of Vodafone Idea from Vodafone Group at Rs 130 per share till it reaches 35.5 percent holding within the company.

However, the option of buying shares at this price will only be available to ABG up to three years from the date of the merger, August 31, 2018. After three years, the conglomerate can purchase shares at the market price under a formalised equalisation formula. Vodafone currently holds a 44.39 stake in Vodafone Idea.

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"The option exists, but ABG’s immediate priority is not boosting its ownership but keeping Vi alive by quickly closing the pending fundraise to beef up the telco’s 4G operations and equipping it to fight financially-stronger adversaries--Reliance Jio and Bharti Airtel," one of the persons cited told ET.

"Though there is no change in the equalisation mechanism announced in March 2017, there have been no conversations at the co-promoters level around ABG buying the additional stake from Vodafone,” added the person.

Vodafone India and Idea had merged in 2018 but operated its brands separately till 2020. The entity upon merger was the largest player in the Indian telecom market in terms of mobile network subscriptions, with about 400 million customers, 35 percent customer market share and 41 percent revenue market share.

But Vi has struggled against telecom rivals Airtel and Reliance Jio, having fallen down to only 284 million subscriptions, third behind Jio and Airtel. The company has been operating at a loss every quarter since the merger and struggling to manage Rs 25,000 crore for the last 10 months without any success. The company has recently introduced new plans in order to shore up its revenue.