The Union government ordered Vodafone Idea Ltd to issue equity shares in exchange for deferred adjusted gross revenue (AGR) and spectrum obligations totaling 16,133 crore.
The completion of the equity conversion plan, which comes more than a year after the government made the first choice, gives Vodafone Idea some breathing room because of its 2.2 trillion-pound debt load as of September 2022. Since 2021, the loss-making telco has struggled to raise 20,000 crore through debt and equity. “We wanted a strong guarantee that the Aditya Birla Group would manage the business and provide the necessary funding. Since the Birlas occurred, we decided to convert. With BSNL added, we want India to have three players in order to protect consumers.” Union telecom minister Ashwini Vaishnaw said in a statement.
Vodafone Idea stated in a stock exchange filing that the Indian government’s “Ministry of Communications has passed an order today, i.e., 3 February 2023, under section 62(4) of the Companies Act, 2013, requiring the company to convert the NPV of the interest linked to postponement of spectrum auction instalments and AGR payments.”” The company will immediately take “all necessary procedures” after the government has ordered that 16.13 billion shares with a face value of 10 per be given to it “Vodafone Idea also stated that the problem.
The government had requested the telco to obtain additional shares from its promoters or from outside investors, the conversion was not dependent on their generating money. The government wanted promoters to inject additional funds and provide a business plan to restore the company before moving forward with the equity conversion, Mint was the first to publish on 3 November.
The government would have taken a 33% ownership position in Vodafone Idea under the equity conversion plan put up in January 2022, and the promoters’ ownership would have fallen from roughly 75% to 50%. However, given all of the changes that have occurred over the past year, it is uncertain what the Centre’s final shareholding will be.
The government had also given Vodafone Idea the opportunity to convert the interest on the deferment of paying the AGR dues of 8837 crore for the fiscal years 2018 and 2019 into equity that would be controlled by the government. Vodafone Idea declined to do so.
