Connect with us

Hi, what are you looking for?

Home » Business » Merger to Nationalisation: Vodafone-Idea’s Story Of Lows and More Lows


Merger to Nationalisation: Vodafone-Idea’s Story Of Lows and More Lows

From the beginning of the merger in 2017 to 2019, Vodafone Idea went on to report losses, and a dwindling subscriber base.

Representational Image (Photo: Facebook)

New Delhi: Vodafone Idea on Tuesday informed that the Indian government will own almost 36 per cent in the country’s third-largest wireless phone operator. From a much-talked-about merger, to court hearings, debt and finally nationalisation, we trace the teleco’s journey. 

With the entry of Jio in 2016, the Indian telecom market was widely disrupted. At that time, Vodafone had 200 million subscribers and Idea had 188 million.

Announced in 2017 and finished in August 2018, the Aditya Birla Group said that Vodafone India and Idea Cellular have completed the merger to create the country’s largest telecom company with 408 million active subscribers and a revenue market share of 32.2 per cent. The deal was valued at Rs 1,55,000 crore.

From 2017 to 2019, the company went on to report losses, and a dwindling subscriber base.

In 2019, a landmark verdict by the Supreme Court required telcos to pay up AGR dues in addition to spectrum usage charges, amounting to over Rs 1.56 lakh crore. 

Before we get to that, we need to understand what AGR is. 

What is AGR? 

In 1994, a model of revenue sharing was arrived at by the telecom operators and Department of Telecommunications. According to this model, the government and telecom operators had to shift to a revenue-sharing fee model that required them to share a part of their adjusted gross revenue (AGR) with the government as annual license fee and spectrum usage charges. 

1994? That’s how far back this goes?

Well, the trouble started in 1999, when the companies couldn’t pay the amount demanded. They instead agreed to pay a percentage of their AGR. 

Advertisement. Scroll to continue reading.

Over the course of the next ten years, what follows is several legal battles, in an attempt to change the definition of AGR, and then eventually, reduce the owed dues. 

Let’s get back to the specific case of Vodafone Idea. 

What happened to Vodafone-Idea?

In 2019, following recurring losses, the parent company, Vodafone, wrote off the book value of the Indian business.

Over November 2019 and December 2019, the company continues to lose market share, and eventually hiked tariffs. 

In June 2020, the Supreme Court orders Vodafone Idea to cough up Rs 53,000 crore, Vodafone Idea seeks a timeline of 20 years for payment. In September, SC asks the company to pay it in 10 years. 

In January 2021, three telcos, file a plea in the apex court claiming that there existed ‘mathematical errors’ in the calculation of the owed AGR dues, but the apex court dismissed the plea. 

Given the situation, the central government, in September 2021, announced a relief package that included a spectrum payment moratorium option, another option to convert interest on airwaves to equity, and reduced bank guarantees among other provisions. 

After already having accepted the four-year moratorium option, Vodafone Idea became the first telco to avail of the equity conversion provision as well on January 11, 2022. 

The decision came as a result of dilution for all the existing shareholders of the company, including the founders, the unprofitable wireless carrier said in a stock exchange filing.

Advertisement. Scroll to continue reading.

With owning about 36 per cent of the shares of the company, the government will become the single largest shareholder in the telecom firm.

Read Full Article



The couple’s friends and family from across the globe will also be a part of the event, and will be able to enter the...


The Congress in Punjab is yet to decide on who will be its face in the Assembly elections. Chief Minister Charanjit Singh Channi and...


Lakshya Sen from Almora won against Singaporean world champion Loh Kean Yew in a thrilling final 24-22, 21-17. He became the first Indian to...


Due to COVID-19 restrictions, the number of visitors to be substantially curtailed this year. We are looking at a range of 5000 to 8000...


The team led by researchers at the University of Exeter found that 13 per cent of people still exhibited clinically-relevant levels of virus after...

You May Also Like


A Lok Sabha MP since 2014, Mann is a popular face in Punjab and is one of the indisputable comedy kings. Mann has also...


Dhanush in his shared statement, apart from revealing the shocking news also asked people to respect their decision and give them the needed privacy...


Prime Minister Modi also highlighted India's role in providing vaccines to the world.


Bhagwant Mann has stood by the party, despite occasional tussles, which are not uncommon to any political party, through its eventful journey in the...