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03/09/2020

Talks On For A Possible $4 Billion Stake In India’s Teleco Vodafone Idea By Verizon And Amazon




Talks On For A Possible $4 Billion Stake In India’s Teleco Vodafone Idea By Verizon And Amazon
United States based e-commerce giant Amazon.com Inc. and largest US wireless telecom carrier Verizon Communications will be holding negotiations with struggling Indian telecom company Vodafone Idea Ltd for a taking up a significant stake in the company. According to reports quoting sources, the value of the stakes in the Indian telecom carrier can be as high as more than $4 billion.
 
An ongoing case in the Supreme Court of India over staggered payments of government dues, which had created a large degree of uncertainty and an adverse court ruling on the case may have threatened the survival of Vodafone Idea, was the main reasons that the negotiation between the three companies had been stalled previously, claimed reports.
 
On Tuesday, the highest court of the India gave the telecom companies a period 10 years to pay a total of ₹1.4 trillion in dues which removed the roadblock for restart of the negotiations.
 
For Vodafone Idea, facing a cash crunch, the sale of stake to the two US companies is crucial for making payment of the government dues as well as in making investments in upgrading its network – which had been halted because of paucity of funds.
 
According to the court case documents, Vodafone Idea has accumulated dues of about ₹50,400 crore ($6.8 billion) that it still needs to pay top the Indian government against licence fee, spectrum usage charges, interest and penalties. The telecom company has already made a payment of ₹7,854 crore ($1.1 billion).
 
In the June quarter, the telecom firm reported staggering losses primarily because of one-time charges which included provisions to cover payments due to the government.
 
The board of the company is set to meet on 4 September to consider proposals for fundraising, Vodafone Idea said.
 
While Amazon has a major presence in the India market, the presence of Verizon is in the Indian market is through its media and online unit Oath Inc.
 
In the past, the US wireless carrier has also partnered with India’s another telecom giant Bharti Airtel Ltd and in July this year, the tow companies jointly launched the BlueJeans video-conferencing service in India targeted at business customers.
 
There were no official comments on the resumption of negotiations from Amazon, Verizon and Vodafone Idea.
 
There were reports previously in the India media that talks between Google and Vodafone Idea were ongoing in which the US based search engine giant was targeting to pick up a 5 per cent stake in the Indian company. However those negotiations did not succeed and Google instead chose to invest $4.5 billion in its Jio Platforms, the digital arm of Reliance Industries Ltd., which is a major rival of Vodafone Idea.
 
The existing pressure on rival telecom companies in the Indian market of forge partnerships was increased by the Jio-Facebook-Google deals struck earlier this year, according to technology and telecom analysts.
 
(Source:www.livemint.com)

Christopher J. Mitchell

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