The government is against the merger of beleaguered Vodafone Idea with state-owned BSNL and MTNL, multiple sources said. The stand comes weeks after industrialist Kumar Mangalam Birla had said that he is “willing to hand over” his 27% stake in the crippled telco to “any entity — public sector/government /domestic financial entity” in the name of “national interest”. Government sources said “multiple and strong logical reasons” suggest “outright rejection” of any proposal that gets the debt-laden and loss-making private entity within the fold of the state-owned companies, which themselves have a poor track record of managing their business and are operational mainly on the back of recurrent government bailouts. “How can we even allow this. It’s almost like having privatisation of profits, and nationalisation of losses?” a senior officer said. Birla’s call appeared to be in line with a suggestion made in a report of Deutsche Bank. “…the only viable solution is for the government to recapitalise Vodafone Idea by converting its debt into equity, preferably, while merging it with BSNL, and then providing it a clear commercial mandate based on profitability targets and incentives,” it had said in a recent note.
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