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Vodafone Idea refuse to file for voluntary bankruptcy

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Indian telecom operator Vodafone Idea (Vi), a subsidiary of Aditya Birla Group (ABG), is not looking to file for voluntary bankruptcy despite its financial struggles, ABG senior executives told ET Telecom

Vi’s financial criticality was revealed on June 7 when Kumar Mangalam Birla, chairman of the telco, wrote to the government offering to hand over the group’s stake in Vi to any public sector or local financial entity who could save the company. 

In his letter, Birla asserted that without immediate government support, the telco would be driven to an irretrievable point of collapse. 

The content of the letter was made public on Monday; two days later, Birla resigned from his position without citing any reasons, and was replaced by Himanshu Kapania, previous non-executive director. 

Experts assumed the executive resignation as prior step to the company’s filing for bankruptcy at the National Company Law Tribunal (NCLT), quasi-judicial body in India that adjudicates issues relating to local companies. 

However, senior executives of ABG stressed that such a move may indicate that the company was to blame for its operational failure and consequent financial crisis, which was not the case.  

The executives said the blame lay with the regulatory regime and lack of a “level playing field” which had led to the dreadful situation that the loss-making telco finds itself in.  

They added that the fate of the company now lies in the hands of the government. 

“The group has put in Herculean efforts to get the business on track. Filing for bankruptcy is not an appealing option considering that it was not a management error that led to the business failure but a lack of level playing field,” a top group official, who preferred to remain anonymous, told ET Telecom

“The company cannot recover at this stage. Operational profits can’t be made. There are no funds that can be infused further by the Aditya Birla Group or Vodafone Group or investors. Its fate now lies in the hands of the government,” said the spokesperson. 

“In most countries, governments do step in to save businesses and employment especially where there is no fraud or malpractice that led to the collapse,” the executive added. 

However, other sources guarantee that if the government does not announce a bailout plan soon, Vodafone Idea is likely to file for bankruptcy at the NCLT. 

In this case, the company can use section 10 of the Insolvency and Bankruptcy Code (IBC), which allows Vi the option and power to voluntarily file for insolvency proceedings.  

The government has so far not responded to Birla’s letter 

In the meantime, the government is working on a relief package for the sector, which would also benefit Vi.  

The package could include surrendering spectrum, reduction of bank guarantees, phasing out or reducing levies such as license fees and spectrum usage charges and prospectively redefining adjusted gross revenue (AGR) to exclude non-telecom items. 

Vodafone Idea’s net debt stood at $24 billion in 2021, as the Indian mobile provider posted a loss of $939.5 million by the end of March 2021. 

Hala is a journalist and an editor with experience in the news industry. She enjoys writing motivational stories aiming to inspire people to overachieve.

Telecoms

India’s Reliance Industries seek controlling stake in UK’s BT Group

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Indian conglomerate Reliance Industries Ltd. (RIL) is assessing the possibility of bidding on British telecom titan, BT Group Plc., reported by the Economic Times.

According to the report published by the news hub on Monday, Reliance is currently planning to place an unsought offer to obtain shares into the British telco, or as an alternative, to have a controlling stake in the company. From the 419 institutional investors in the British firm, some have expressed their interest in cashing out if a suitable offer surfaces.

In parallel, Reliance is considering proposing a partnership with BT’s fiber-optic firm, Openreach, to finance and expand its plans.

Currently, BT Group’s market gap has reached a whopping $20.63 billion since November 26th. In the event of RIL taking control of the UK company, it will mark the biggest outbound merger and acquisition (M&A) related to any Indian establishment.

An outbound M&A is when a domestic company obtains or merges with a different firm in a different country. This demands notable guidance concerning the legality and issues of compliance to accommodate the other country’s demands, restrictions, and requirements to be included in the pre-merger interactions.

Analysts believe that Asia’s wealthiest man, Chairman and managing director at RIL, Mukesh Ambani, has directed his attention towards BT to further expand the company’s reach on a global scale.

It is worth mentioning that this does not mark the first time Reliance has tried to reach out for global expansion. In September, the Indian Group was outbid by a consortium of Apax and Warburg Pincus to obtain power over Netherland’s T-Mobile.

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Palestine to finally receive 4G rollout, agreement to be settled

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Israel has finally agreed to authorize 4G rollout to Palestine, as its latest initiative from the Israeli government to enhance Palestinian daily life.

While the country has already deployed 5G networks to its areas, Palestinian citizens have yet to indulge in the 4G rollout experience, as Palestinian telcos are still operating their services with 3G.

Following a closed meeting held between Israel and Palestinian telecoms, and repetitive complaints from Palestinian officials that Israel has not shown initiative to begin technical discussions until April.

Despite that no official agreement has been made, Palestinian telcos are waiting for clarification regarding the extent of bandwidth to be available, given that a previous Israeli agreement has been rejected by the telcos since Israel offered to provide a modest number of frequencies.

Even if Israel authorizes the agreement, local telecom operators will still need around six months to a year to purchase and import the required equipment for the 4G rollout in rural areas.

In 2018, the Israeli government agreed on the deployment of a 3G network for Palestinian citizens. However, the rollout was confined to the West Bank, given that Israel has not permitted domestic service providers to buy 3G equipment for Gaza, which is still operating on 2G.

The demand has risen from Palestinian to attain 4G networks, as it will heighten the country’s economy, as well as push residents from using Israel cellular networks and focus on local ones instead.

It is worth mentioning that Israeli networks deliver a much higher signal frequency reaching deep into Palestine’s region, in addition to their low-cost effectiveness and faster networks compared to the local ones.

This could potentially raise havoc for Palestine’s telcos as their pricing is too high, a factor led by Israel’s intense restrictions on network frequencies and limitations on towers infrastructure and location.

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Huawei to boost Malaysia digitization through new innovation center

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In an effort to boost Malaysia’s digitization, Chinese telecom giant Huawei seeks to accelerate the country’s digital economy transformation by building the country into a regional digital hub, Huawei said in a press release on Tuesday.

The company unveiled its newly refurbished and upgraded Huawei Customer Solution Innovation Center (CSIC) as part of a commemoration ceremony celebrating its 20th anniversary since entering the Malaysian market, the release noted.

Malaysia Prime Minister, Dato’ Sri Ismail Sabri Bin Yaakob said, “The CSIC is a testament to Huawei Malaysia’s commitment to the nation’s digital transformation.”

I was informed that most of Huawei Malaysia’s employees are local. Talents are a crucial part in accelerating digital transformation for the nation, he said.

The Prime Minister added that he believes that Malaysia has the capacity and capability to achieve 100 percent digital inclusivity, especially among vulnerable communities.

“I am proud to say, in embracing the concept of Keluarga Malaysia, Huawei has taken an important role in helping the Government address this matter. I hope more corporations will come forward to follow in your footsteps,” he said.

As such, Huawei’s CSIC was designed as an Information and Communications Technology (ICT) Hub and Centre of Excellence to run the industry’s open ecosystem and accelerate digital economy transformation in Malaysia.

The CSIC, which is located in Integra Tower at the heart of Kuala Lumpur, aggregates the company’s over 120 reference applications and services globally.

Huawei’s customers and partners can leverage this innovative platform to design and test technology solutions, verify new business models, and nurture innovation applications and services to both the public and private sectors.

Huawei Malaysia CEO Michael Yuan said that through the CSIC, Huawei Malaysia would continue to bring global experiences to serve the needs of the ICT industry in Malaysia and to assist local stakeholders in succeeding in their businesses.

“This center will act as a catalyst to accelerate Malaysia’s digital transformation and to capitalise on the potential of advanced technologies and assist in driving investments in the digital economy for the nation at the same time,” added Yuan.

Cloud Computing was another highlight, with Huawei working with Malaysian communication service provider Telekom Malaysia on their Alpha Edge, the only Malaysian-owned Cloud and AI infrastructure and services to enterprises and government institutions that ensures data sovereignty.

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