Debt-ridden telecom operator Vodafone Idea Ltd (VIL) on Friday said the central government has approved the conversion of Rs 16,133 crore interest dues into equity, which will amount to around 35.8 percent stake in the company.
Equity shares of face value of Rs 10 each will be issued to the government at the same price.
"...it is hereby informed that Ministry of Communications...in line with the Reforms and Support Package for Telecom Sector communicated earlier and the conversion option exercised by the Company as provided for therein, passed an order today... directing the company to convert the NPV of the interest related to deferment of spectrum auction instalments and AGR Dues into equity shares to be issued to the Government of India," the company said in an exchange filing.
Further, it said, "The total amount to be converted into equity shares is Rs. 16133,18,48,990. 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."
Post the conversion, the government will become the largest stakeholder in the company with 35.8% stake. Vodafone and Birla Group will have a stake of 28.5% and 17.8% respectively.
The government has given telecom operators an option of paying interest for the 4 years of deferment on the deferred spectrum instalments and AGR dues by way of conversion into equity of the NPV of such interest amount.
Earlier the government had insisted that the telecom operator will have to infuse funds as it needs capital either in the form of equity or debt to keep it running.
Telecom Minister Ashwini Vaishnaw, in an exclusive interview with CNBC-TV18's Shereen Bhan on the sidelines of the World Economic Forum in Davos, stated, "Vodafone needs capital. And capital has to come either in the form of equity capital or debt capital. Conversion is a non-cash transaction and non-cash transactions are not going to bring capital."
This was after the telco's key promoter and Chairperson of the Birla Group Kumar Mangalam Birla met Vaishnaw.
The company's total gross debt, excluding lease liabilities and including interest accrued but not due, as of September 30, 2021 stood at Rs 1,94,780 crore. The amount comprises deferred spectrum payment obligations of Rs 1,08,610 crore, AGR liability of Rs 63,400 crore that are due to the government and debt from banks and financial institutions of Rs 22,770 crore.
The company is governed by shareholders who hold at least 21 percent stake in the entity as per the shareholders agreement (SHA). However, VIL will now amend shareholders' agreement in light of the conversion of interest into equity to reduce the threshold level for governing rights to 13 percent from 21 percent.
VIL is the only telecom operator which is yet to place purchase orders for 5G services equipment and has been struggling to pay dues of its vendors.
Indus Towers last month made provision of doubtful debt worth Rs 2,298.1 on account of troubled balance sheet of VIL.
It is in process of issuing optionally convertible debentures of up to Rs 1,600 crore to vendor American Tower Corporation to clear its dues.
Shares of VIL closed at Rs 6.89 apiece on Friday at the BSE, up by 1.03 per cent compared to previous close.
(Edited by : Pradeep John)
First Published: Feb 3, 2023 8:13 PM IST
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