Vodafone Idea again approves preferential issue of OCDs worth Rs 1,600 crore to ATC

The board of Vodafone Idea has once again approved the allotment of Optionally convertible, unsecured, unrated and unlisted debentures worth Rs 1,600 crore to ATC Telecom Infrastructure Pvt. Ltd.

Funds raised from this OCD issue will be used to pay amounts owed to ATC under the master lease agreement and some part will also be used for general corporate purposes.

Vodafone Idea had to seek fresh approval to issue Rs 1,600 crore worth of OCDs to ATC Telecom, as the previous issue could not be completed within the stipulated time.

At the extraordinary general meeting (EGM) of the company, held on November 21, the shareholders of Vodafone Idea had approved issuing shares worth Rs 1,600 crore to ATC Telecom Infrastructure, the Indian arm of ATC, on a preferential basis to settle dues of the infrastructure vendor by converting the due amount into equity, if the amount remained unpaid in 18 months.

However, one of the conditions precedent to the preferential issue was conversion by the Government of India of interest from deferment of Adjusted Gross Revenue and Spectrum Dues owed by the company into equity shares of VIL. As the company has not received any communication from the Government of India on such a conversion, the issuance of OCDs to ATC could not been completed, within the validity period of the shareholders' resolution.

Vodafone Idea is the largest customer of ATC Telecom Infrastructure, the Indian arm of American Tower Company that provides mobile towers on lease. In the September quarter, VIL’s shortfall in payments to the ATC totaled nearly Rs 392 crore.

Indus Towers' board had also warned Vodafone Idea in September of discontinuation of services over pending dues that amounted to nearly Rs 7,000 crore. Following this, Vodafone Idea sought softer repayment terms, which led to Indus Towers allowing the telco to make staggered payments by July 2023 to pay up the pending dues.

However, the company said that Vodafone Idea's promise of making full payments from January 2023 has not materialised.

Vodafone Idea is also plagued with a consistent loss in subscribers. The company has lost close to 1 crore subscribers over the last three months.

Shares of Vodafone Idea ended 5 percent higher at Rs 7.15 on Tuesday.