Govt Not Interested in Supervising Vodafone Idea’s Operations; Stock Zooms Over 6%

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Govt Not Interested in Supervising Vodafone Idea’s Operations; Stock Zooms Over 6%

By Malvika Gurung

Investing.com -- Shares of the loss-making telecom company Vodafone Idea (NS: VODA ) opened in green on Wednesday and was trading 6.78% higher at Rs 12.6 apiece at 10:15 am, a day after the stock tumbled 20.5% to Rs 11.8 on the NSE.

After the company’s announcement on Tuesday that the Government would be its biggest shareholder, holding a stake of 35.8% in the company, followed by its promoter group companies Vodafone (LON: VOD ) (28.5%) and Aditya Birla Group (17.8%), and that it would issue shares to the Govt at Rs 10 apiece, the stock nosedived.

However, following this development, some senior Govt officials clarified that the Centre had no interest in playing a managing role in Vi’s operations, given its shareholding in the telco nor did it plan to convert Vi into a state-owned telco. 

They added that the Govt plans to offload the stake in Vi, once the company's operations stabilize and enough liquidity is generated to attract investments into the loss-making telco.

After Vi’s announcement on Tuesday, while the stock crashed, several analysts and global funds pointed that the development was a credit positive move from investors’ view, as it would enable the telco to raise funds, thereby creating a pathway for longer-term survival.

The VP of IIFL Securities stated that for the 5G space, cash flows are required, and Vi’s recent development is a positive move towards debt resolution, which will attract investors.

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