Editorial – MAR 2025

The government has bankrolled Vi’s debt and spectrum dues and has poured in money by first acquiring and then ramping up equity. The government has taken 49 pc equity in Vi in exchange of whopping Rs 53,183 crore dues. This swap happened in two tranches. The valuation of the swap is an enigma. It valued Vi shares more than the traded share price in both tranches. In the second tranche, it swapped more for a lesser equity. In the first tranche Vi exchanged Rs 16,133 crore dues for 33.44 pc equity, while in the second tranche it did so for Rs 36,950 crore and got just 15.56 pc. By converting at higher rates than the traded price on BSE, the government lost Rs 15,539 crore cumulatively in these two deals and also lost out on huge amounts of interest amounts by absorbing debt as equity.

What is the raison d’être for such monumental financing? Vi has reported a loss of Rs 2,021 crore for the nine months period ended December 31, 2024. It has inadequate free cash flows to honour obligations as per timelines or service capex loans, which it requires so desperately to stay in the game. Meanwhile Vi’s equity count has expanded post swaps from 3,211 cr to 10,834 cr. It is as if Vi has been given a lien to issue worthless paper as equity.

Vi’s ask list has grown and repeatedly it has been indulged – from seeking bank guarantee waivers to returning spectrum.

The government was ensnared with a projection that with its AGR infusion as equity, the company valuation would jump exponentially and would progressively reach over Rs 4.50 lakh crore in FY28, and correspondingly the market value of government stake will also increase. The reality is Vi has a negative net worth of Rs 102,011 crore.

So much for ‘Project Rebirth’ that DoT bought into on the back of fear mongering by Kumar Mangalam Birla about banking stress and imminent duopoly. Our cover story this edition presents the sequential details and stats on how the government is trapped in this endless expensive gamble.