Duopoly is not good: Chidambaram backs VI revival while warning against govt takeover

Time of India

6 hours ago

Former Union Finance Minister
P Chidambaram
strongly supported efforts to revive
Vodafone Idea
(Vi) on Wednesday and asserted that a
duopoly
in the
Indian telecom sector
, namely of private players
Bharti Airtel
and Reliance Jio. He further said that lack of competition in any industry would be detrimental to consumer interest and
market health
.
'Duopoly is not good in any industry,' the Congress leader said in a post on X, applauding Union Minister
Jyotiraditya Scindia
's recent push to breathe new life into the struggling telecom company.
He also noted the golden years of India's telecom boom when global giants such as AT&T, BT, Verizon, Etisalat, and Hutchison eagerly entered the Indian market. However, he blamed their eventual exit on India's complex and unpredictable regulatory environment.
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— PChidambaram_IN (@PChidambaram_IN)
'Revival yes, but not through a govt takeover'
While backing the idea of reviving Vi, Chidambaram cautioned against the government turning the company into a public-sector telecom entity, in which the Centre already owns 49% stake, through further capital infusion.
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'The way to revive Vi is not for government to infuse more funds—already Rs 36,500 crore—and make Vi into a government company,' he said.
Instead, he advocated for a different solution: encouraging a global telecom leader to take over Vi and provide "stiff competition" to the two existing private players by Bharti Mittel and Mukesh Ambani, respectively.
Centre explores financial relief options
Chidambaram's comments come as the Centre considers various measures to prevent the telco's collapse. Officials told
ET
that the government is weighing proposals to restructure Vi's massive Rs 83,400 crore AGR (adjusted gross revenue) dues.
These include extending the repayment tenure from six to 20 years and switching from a compound to a simple interest rate to ease the annual burden. Such a move could potentially save Vi over Rs 16,000 crore in interest costs if applied prospectively—and significantly more if made retrospective.
Even so, some officials remain sceptical about Vi's ability to meet even reduced obligations, given its weak cash flows and outstanding liabilities. Despite earlier government support—such as converting Rs 36,950 crore of spectrum auction dues into equity in March 2024—Vi continues to face financial strain. The telco must pay Rs 18,064 crore annually starting FY26, and may fall short of cash to meet obligations by FY27.
Vi's survival still hangs in the balance
Amid this precarious financial situation,
Vodafone Idea
is renewing efforts to secure large-scale funding to stabilise operations and invest in its network. According to a
Bloomberg
report, Vi is in talks with a consortium of lenders led by the State Bank of India to raise around ₹25,000 crore (approx. $2.9 billion).
The debt package is expected to be a mix of domestic and foreign loans with a tenor of about 10 years.
This marks a revival of an earlier fundraising plan that was deferred due to banks' concerns about the company's finances and regulatory liabilities. The urgency has grown as Vi continues to lose subscribers to rivals Reliance Jio and Bharti Airtel.
If successful, the loan would help Vi fund capital expenditures and expand its network in a bid to regain market share. Global banks are also expected to participate in the consortium, with the fundraise likely to conclude within a year.
In parallel, Vi's board has approved plans to raise an additional Rs 20,000 crore through equity or debt instruments. However, progress depends on the government's final stance on AGR-related relief, which remains uncertain.