Vodafone Idea to give 36% stake to govt, agrees to convert AGR dues, spectrum interest into equity

The board of Vodafone Idea Ltd has approved conversion of AGR dues and spectrum interest into equity, leading to the government becoming a nearly 36% stakeholder in the telecom company. “It is now informed that the Board of Directors, at its meeting held on 10 th January, 2022, has approved the conversion of the full amount of such interest related to spectrum auction instalments and AGR Dues into equity, ” the company announced in a filing to BSE. Following conversion, it is expected that the Government will deem around 35.8% of the total outstanding shares of the Company, while the proponent shareholders Vodafone Group and Aditya Birla Group would maintain around 28.5% and around 17.8% stake in the company respectively.

Vodafone Idea shares precipitated roughly 19% today to Rs 12.05 apiece on NSE, before partially recovering losses. The net present ethic of interest is expected to be about Rs 16,000 crore, following final affirmation by government departments of Telecommunications, the company said. The equity shares will be issued to the government at par value of Rs 10 per share.

This reform by the government to provide an option to monetise interest portion of the AGR and range dues for 4 years was targeted for Vodafone Idea given the company is facing such a cash crunch situation, Nitin Soni, Senior Director, Corporates at Fitch Ratings, told CNBC TV1 8. This will provide some cash flow relief to the company, and help them to expand their 4G range, he added.

However, Soni said the company is not investing enough on capex and it needs fresh equity assets. Soni memorandum it will be challenging for any new investors to put in money in Vodafone Idea because contenders Bharti Airtel and Reliance Jio have strong sector balance sheets now.” In 12 -1 8 months the situation will rapidly deepen, and the interruption at Vodafone Idea to find fresh equity investments will further debilitate their competitive market importance. Overall, in the short term I don’t see any big-hearted investors putting their coin in the telcos ,” he said.

The development comes as antagonist Bharti Airtel said it is not issue equity to the government and agreed to pay the interest on shelved range and adjusted gross revenue drawbacks last week. In October, DOT offered a succour bundle to telecom conglomerates with various options to the telecom companies to clear their oweds. One of the gives was an option to defer payment of range auctioneer installments and AGR pertained dues by four years. Both Vodafone Idea and Airtel accepted that offer.

The relevant date for pricing of equity shares would be August, 14, 2021. “The price shall be equal to higher of the average of weekly high and low of the volume weighted average price of the equity shares during the last 26 weeks predating the relevant year or two weeks preceding the related date, ” the company said.

The adjusted gross revenue( AGR) of the telecom industry rose 4.24% sequentially to Rs 53,510 crore for the July-September 2021 date, primarily on the back of increased mobile revenues of the operators, The Financial Express reported earlier today. The access business or portable services AGR of all private telcos- Bharti Airtel, Reliance Jio and Vodafone Idea- rose over the period, while that of state-run BSNL lowered, showed data released by the Telecom Regulatory Authority of India( Trai ).

Read more: financialexpress.com

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