Amazon.com Inc. and Verizon Communications, the largest wireless carrier in the US, are set to resume talks to buy a significant stake in struggling Vodafone Idea Ltd for more than $4 billion, two people aware of the negotiations said.
The stake-sale talks were paused because the outcome of a Supreme Court case on staggered payments of government dues was uncertain and could have threatened the survival of Vodafone Idea, the people said seeking anonymity.
Tuesday’s decision by the top court to give telcos 10 years to pay a total of ₹1.4 trillion in dues paves the way for a resumption of the negotiations.
The fundraising is crucial for cash-strapped Vodafone Idea to pay government dues and invest in upgrading its network, a process that was halted for lack of funds.
Of the combined dues of all telcos, Vodafone Idea alone needs to pay around ₹50,400 crore more to the government in licence fee, spectrum usage charges, interest and penalties. It has already paid ₹7,854 crore.
The company reported a staggering loss of ₹25,460 crore in the June quarter due to one-time charges, including provisions to cover payments due to the government.
On Tuesday, Mint reported that the company is resuming talks with financial and strategic investors, citing senior company officials.
In a late-night filing on Tuesday, Vodafone Idea said that its board will meet on 4 September to consider proposals for fundraising.
While Amazon has a major presence in India, Verizon is present in India through its media and online unit Oath Inc.
The US wireless carrier has also partnered with Bharti Airtel Ltd in the past and, most recently, in July, when it launched the BlueJeans video-conferencing service in India to serve business customers.
While both Amazon and Verizon declined to comment, Vodafone Idea spokespersons did not respond to emailed queries
Earlier this year, Financial Times reported that Google was in talks to acquire a 5% stake in Vodafone Idea.
Google, however, decided to invest $4.5 billion in its rival, Jio Platforms, the digital arm of Reliance Industries Ltd.
Technology and telecom analysts have already stated that the Jio-Facebook-Google deals would only increase the pressure on rival telecom companies to forge similar partnerships.
While Vodafone idea will not compete with Reliance Jio on the range of offerings, it will expand its connected ecosystem theme to include products and services that go beyond telephony, according to the people cited above.
In the past, it has partnered with Amazon on several offline and online initiatives.
Bharti Airtel Ltd and Vodafone Idea lost 4.7 million subscribers each in May, while Reliance Jio Infocomm Ltd added 3.7 million users in the month, according to Telecom Regulatory Authority of India (Trai) data.
Jio Platforms, which includes all of Reliance Industries’ digital assets, has raised ₹1.18 trillion by selling a 25.24% stake to a clutch of investors, including Facebook Inc, Google, Qualcomm and private equity companies such as General Atlantic, KKR and Vista Equity partners, among others, since April.
This article was first published on livemint.com