With an eye-popping 765 million broadband subscribers, it is one of the largest guzzlers of data in the world.
Yet, these numbers don’t tell the story of the turmoil within.
“Giving up the majority stake was a clearly an option of last resort.
Three private operators – Vodafone Idea, Reliance Jio and Airtel – together hold about 90% of India’s cellular market.
“If Vodafone Idea was a bank or a financial institution, it would have been labelled too big to fail by now.
Further, this also sends a positive signal to foreign investors,” Ankit Jain, assistant vice-president at ICRA, an investment and credit rating agency, said.
The unending price war and the overhang of dues owed by operators to the government – outstanding spectrum payments and a certain proportion of revenues earned by telecoms companies that are shared with the government – shrunk profits.
Last September, the government offered cash-strapped operators a four-year moratorium on the dues to help them save enough cash to pay back dues, expand network and buy spectrum.
Investors don’t appear to be enthusiastic about the government’s move – Vodafone Idea shares plunged nearly 21% after the announcement, the most in nearly a year.
Some analysts wonder what the government will be doing with another telecom company, when it already runs one which makes losses.
A new player with ambitions of a pan-India presence will need deep pockets and ample shareholder support to undercut existing prices.