Center may hold 35.8% stake in Vodafone Idea as firm decides to convert outstanding liability into equity

Debt-ridden Vodafone Idea (VIL) has decided to opt for converting interest liability of around Rs 16,000 crore payable to the government into equity, which will account for about 35.8 per cent stake in the company, according to the telecom firm’s regulatory filing. If the plan goes through, the government will become one of the largest shareholders of the company, burdened with a debt of around Rs 1.95 lakh crore.

“… The Board of Directors, in its meeting held on January 10, 2022, has approved the conversion of the entire amount of such interest into equity relating to spectrum auction installments and AGR dues,” Vodafone Idea said in a regulatory filing. The Net Present Value (NPV) of this interest is expected to be around Rs 16,000 crore as per the best estimates of the Company, subject to confirmation by DoT.

The government has given telecom operators an option to pay interest for 4 years on deferred spectrum installments and AGR dues by way of conversion of such interest amount into equity of NPV.

VIL stated that since the average price of the shares of the company as on the relevant date of August 14, 2021 was below par, equity shares would be issued to the government at par value of Rs 10 per share, subject to final confirmation by DoT . ,

“Hence conversion will result in dilution of all existing shareholders of the company including the promoters. After the conversion, it is expected that the government will hold about 35.8 per cent of the total outstanding shares of the company, and promoter shareholders will hold around 28.5 per cent (Vodafone Group) and about 17.8 per cent (Aditya Birla Group). respectively,” the filing said.

VIL shares were trading at Rs 12.55 on the BSE in the morning, which is 15.49 per cent lower than the previous one.

(with PTI inputs)

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