The government has agreed to convert approximately Rs 16,000 crore in deferred adjusted gross revenue (AGR) dues from Vodafone Idea into equity at Rs 10 per share. The move occurred after the government obtained assurances from the carrier’s promoters that they are dedicated to the enterprise and will bring in the required finances.
According to analysts, the conversion, which has been in the works for a year, will make the government the single-largest shareholder in the loss-making telco, with a likely holding of roughly 33%. Vodafone Idea’s co-promoters are the Vodafone Group of the United Kingdom and the Aditya Birla Group of India, which own 47.61% and 27.38%, respectively. Following the conversion, the two will hold 31.8% and 18.3%, bringing their total interest to more than 50%.
“We had sought a firm commitment that the Aditya Birla Group would run the company and bring necessary investments. “Because the Birlas have agreed, we have agreed to convert,” said communications minister Ashwini Vaishnaw. “We want India to be a three-player market, with BSNL as a fourth player, to ensure healthy competition for consumers.”
The share conversion issue has put the cash-strapped operator’s intention to raise capital from external investors on hold, which it sorely needs to clear vendor dues such as Indus Towers and extend its existing 4G network. It also needs to finalize 5G equipment supply deals with companies like Ericsson and Nokia as soon as possible to roll out next-generation networks and halt growing subscriber losses.
The total amount to be converted into equity shares is Rs 16,133.18 crore, and the company has been directed to issue 1613.31 crore equity shares, each with a face value of Rs 10 and an issue price of Rs 10.
On the BSE, Vodafone Idea shares closed 1% higher at Rs 6.89. The filing occurred after market hours.
