Indian government set to complete its latest Vodafone Idea move

It looks like the Indian government is about to deliver on its promise to forgive some Vodafone Idea debt in return for a third of the company.

The news comes courtesy of Indian news agency PTI, which reports that the deal agreed at the start of this year will complete when Vodafone Idea shares stabilise at 10 rupees. A stock market filing from almost a year ago there was confusing talk of a ‘par’ share value of 10 rupees, but our assumption was that meant the Indian government was prepared to pay a small premium if the going rate was a bit below that.

“There is a SEBI norm that the acquisition should take place at par value. DoT will clear the acquisition after VIL shares stabilise at ₹10 or above,” PTI was told by an ‘official source’. SEBI stands for Securities and Exchange Board of India, so it seems the government is claiming to have its hands tied by bureaucracy beyond its control.

This is just the latest chapter in an increasingly ridiculous saga involving huge sums of money owed by Vodafone Idea and, to a lesser extent, Bharti Airtel for various taxes, licenses and assorted levies to the Indian state. It has been clear for years that the sums involved are so far in excess of what Vodafone Idea can afford to pay that it can’t even keep up with the mounting interest.

Vodafone Idea is handing over a third of the company just to be forgiven less than a tenth of what it owes. The fact that the Indian government has apparently dragged its feet over even this totally inadequate concession just adds to the farcical feel to the whole affair. The government insists it has no desire to control the company but unless it does something far more decisive there won’t be any that matter will be rendered irrelevant by its bankruptcy.

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