Indian telecom operator Vodafone Idea’s board has informed the telecom department that it will opt for converting the interest on spectrum and adjusted gross revenue (AGR) dues into equity shares.
Bharti Airtel on Friday confirmed its decision to not convert the interest on deferred spectrum related payments and government dues into equity.
Shareholding Pattern
In this case, it would mean that government will hold 35.8% and become the single largest shareholder in the third largest telco of the country.
Following the conversion into equity Promoters of Vodafone Group would hold around 28.5% and Aditya Birla Group around 17.8%.
Total Interest and dues
Vodafone Idea, a combination of the India unit of Britain`s Vodafone Group and Idea Cellular, has paid the government 78.54 billion rupees in government dues, but still owes roughly 500 billion rupees.
The “net present value” of the interest is expected to be about 160 billion Indian rupees.
Financial health
Its financial health deteriorated after Reliance Jio Infocomm Ltd. sparked a brutal price war in 2016, and quickly clinched market share to become the top player.
Govt Releif
As a part of relief package in October 2021, the Department of Telecommunications had laid out various options for clearing the statutory dues, following which, the Vodafone Idea opted for deferring payment of spectrum auction installments & AGR dues by 4 years.
However, the telecom companies were also required to pay interest on these dues during the moratorium period.
The DoT, had further given a 90-day window to the telcos to decide if they want to opt for converting the interest amount pertaining to the moratorium period into equity.
Impact on Shares
Shares of Vodafone Idea slumped 19 per cent to Rs 12.05 on the BSE in Tuesday’s intraday trade after the company’s board approved conversion of AGR and spectrum liabilities into equity.
At 9.42 am, Vodafone Idea was down 17 per cent at Rs 12.30 on the BSE.
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