India To Own 35.8% in Vodafone Idea After Conversion of Dues (techcrunch.com) 18
Vodafone Idea said on Tuesday it is giving the Indian government a 35.8% stake in the company after its board approved conversion of dues and spectrum auction instalments into equity to save the third-largest telecom operator in the country from collapsing. From a report: The operator, a joint venture between the British telecoms group Vodafone and local billionaire Kumar Mangalam Birla's conglomerate, has been attempting to avoid a collapse for several years after the arrival of Reliance Jio, which undercut the competitors with cheap data and free calls offering. Vodafone Idea, additionally, owed New Delhi dues of roughly $6.76 billion. Following the conversion into equity, Vodafone Group's shareholding will be diluted to 28.5% while Aditya Birla Group's will shrink to 17.8%. The Indian government will become the largest shareholder in the wireless telecom operator. [...] Tuesday's announcement comes months after the Indian government gave operators more time to pay dues on a two-decade dispute last year.
Communism (Score:2)
At what point is it not communism, where the state owns a corporation competing in a "private sector". If the company lost out by being undercut and the government has significant financial incentive to see a return on their "investment", it seems like they could rig the rules quite easily.
It's an honest question with the follow up being, is this worse than pure communism (while ignoring no nation has ever been purely communistic)?
Re: Communism vs Capitalism (Score:2)
Re: Communism vs Capitalism (Score:2)
Fair.
Re: Communism (Score:2)
Uh, that they shouldn't? It should be blind trust or they are no longer part of the regulatory body...
Re: Communism (Score:2)
Re: Communism (Score:2)
I guess what I am saying is that is a slipper slope. What stops state capitalism from becoming communism?
Re: (Score:2)
Most developed nations, if not all of them, have some state owned corporations. It's not really a big deal.
Re: (Score:2)
At what point is it not communism, where the state owns a corporation competing in a "private sector". If the company lost out by being undercut and the government has significant financial incentive to see a return on their "investment", it seems like they could rig the rules quite easily.
It's an honest question with the follow up being, is this worse than pure communism (while ignoring no nation has ever been purely communistic)?
Was it communism when the US Government did it [nytimes.com] and owned a majority of the company?
Re: (Score:2)
This is an organization (the Indian state) trading a debt for an equity stake in the troubled business. Should the business get back on it's feet, they can repurchase that stake and hopefully the Indian government will profit on the deal. The state is literally playing the capitalist game.
In a communist system, the state would simply say they own the business outright and tell everyone to "Suck it!" while they mismanaged it into the ground.
The United States has taken similar equity stakes in troubled car
Re: Communism (Score:2)
Seems fair. I am not familiar with this history in the US, how did it turn out?
Re: (Score:2)
Seems fair. I am not familiar with this history in the US, how did it turn out?
GM and Chrysler are still around. One of em even makes decent vehicles now!
Ha ha! And now Toyota is the largest US automaker [cnbc.com].
The Chrysler episode in the late 1970's was actually a loan guaranteed by the US government, but it did allow them to restructure under Lee Iacocca and the loan was paid off early with interest.
In 1978, Lee Iacocca was brought in to turn the company around [wikipedia.org], and in 1979 Iacocca sought US government help. Congress later passed the Loan Guarantee Act providing $1.5 billion in loan guarantees.[37] The Loan Guarantee Act required that Chrysler also obtain $2 billion in concessions or aid from sources outside the federal government, which included interest rate reductions for $650 million of the savings, asset sales of $300 million, local and state tax concessions of $250 million, and wage reductions of about $590 million along with a $50 million stock offering. $180 million was to come from concessions from dealers and suppliers.[38] After a period of plant closures and salary cuts agreed to by both management and the auto unions, the loans were repaid with interest in 1983. In November 1983, the Dodge Caravan/Plymouth Voyager was introduced, establishing the minivan as a major category, and initiating Chrysler's return to stability.[38][39]
The GM episode was more recent, part of the 2008 global recession, and was fairly successful, if mixed.
In March 2009 [wikipedia.org], after the company had received $17.4 billion in bailouts but was not effective in a turnaround, President Barack Obama forced the resignation of CEO Rick Wagoner.[99] General Motors filed for a government-backed Chapter 11 reorganization on June 8, 2009.[100][101] On July 10, 2009, the original General Motors sold assets and some subsidiaries to an entirely new company, including the trademark "General Motors".[100][101] Liabilities were left with the original GM, renamed Motors Liquidation Company, freeing the companies of many liabilities and resulting in a new GM.[100][101] Through the Troubled Asset Relief Program, the United States Department of the Treasury invested $49.5 billion in General Motors and recovered $39 billion when it sold its shares on December 9, 2013, resulting in a loss of $10.3 billion. The Treasury invested an additional $17.2 billion into GM's former financing company, GMAC (now Ally Financial). The shares in Ally were sold on December 18, 2014, for $19.6 billion netting the government $2.4 billion in profit, including dividends.[102][103] A study by the Center for Automotive Research found that the GM bailout saved 1.2 million jobs and preserved $34.9 billion in tax revenue.[104]
As for the banks, best to just read the entire article on the Emergency Economic Stabilization Act of 2008 [wikipedia.org]
Re: Communism (Score:3)
Likewise, your concerns about a particular company influencing regulations is also true under any capitalist regime as has been documented since Marx's first critiques of the evolution of capitalism in the UK.
Re: Communism (Score:2)
Interesting points. I don't think I can refute anything you said but also I don't really have anything to add.
Resilience here is used as derogatory?
Re: (Score:2)
"At what point is it not communism"
When the shareholders get fucked 100% instead of a slow fucking. like this.
"Vodafone Group's shareholding will be diluted to 28.5%"
I hope they do not repeat the story of Air India (Score:1)