NEW DELHI: Ending months of speculation and uncertainty, the government has agreed to convert interest dues related to deferred AGR and Spectrum Usage charge (SUC) payments into equity.
Telecom operator Vodafone Idea Limited (VIL) on Friday said in an exchange filing that the total amount to be converted into equity shares is Rs. 1,613 crores at a price of Rs 10 each. Following this move, the government will have a 33% stake in Vodafone Idea, making it the single-largest shareholder in the private company.
Vodafone’s stake in Vodafone Idea now has fallen from 47.61% to 31.8% and Aditya Birla Group’s holding will drop from 27.38% to 18.3%.
“The Company has been directed to issue 1613,31,84,899 equity shares of the face value of Rs. 10 each at an issue price of Rs. 10 each,” said the company in an exchange filing.
This comes after almost a year since when the debt-laden telco opted to convert the interest dues of Rs. 16,130 crores related to deferred AGR and SUC payments into equity.
In October last year, Securities and Exchange Board of India (Sebi) also cleared the government proposal to convert dues into equity.
The move by the government to finally agree to convert its dues to equity has come as a lifeline for the company. The company has in the recent past expressed its inability to raise funds because of the government’s delay in converting its dues into equity. It also blamed the government for its inability to invest in 5G rollout. The government has on many occasions said that the telco needed capital infusion more than the government’s conversion of its dues into equity.
The industry experts opined that raising funds for the telco is still the biggest challenge.
For the past many years, the company has been trying to raise capital from the market but failed to do so. “Raising funds to run the day-to-day business is the biggest challenge for Vodafone as also upgradation to 5G. I believe the challenge is going to increase more and more going forward,” said Prashanth Tapse, Research Analyst, Senior VP (Research) of Mehta Equities.
As on September 30 this year, the company's total gross debt, excluding lease liabilities and including interest accrued but not due, stood at Rs 2,20,320 crore.