Government To Own 36% Stake In Vodafone Idea As It Converts Debt To Equity

Government will own 35.8 per cent stake in Vodaone Idea as the company's board approved conversion of dues into equity. The company's board decided to convert full amount of interest related to spectrum auction installments and adjusted gross revenue (AGR) dues into equity, Vodafone Idea said in a stock exchange filing on Tuesday.

Debt-ridden Vodafone Idea (VIL) has decided to opt for converting about Rs 16,000 crore interest dues liability payable to the government into equity which will amount to around 35.8 per cent stake in the company, as per a regulatory filing of the telecom firm.

If the plan goes through, then the government will become one of the biggest shareholders in the company which is reeling under a debt burden of about Rs 1.95 lakh crore.

Vodafone Idea will issue shares to the government at Rs 10 per share and it will result in dilution to all the existing shareholders of the Company, including the promoters. Post the preferential allotment of shares promoter shareholders would hold around 28.5 per cent (Vodafone Group) and around 17.8 per cent (Aditya Birla Group).

The company took the decision to convert debt into equity as part of the Telecom Relief Package announced by the government in October last year. The telecom department also allowed the telecom companies an option of converting the interest that would accrue on installment payment during the moratorium period into equity, which Vodafone Idea's board decided to opt.

VIL said that since the average price of the company's shares at the relevant date of August 14, 2021 was below par value, the equity shares will be issued to the government at par value of Rs 10 per share, subject to final confirmation by the DoT.

Following the latest development Vodafone Idea shares came under heavy selling pressure and the stock fell as much as 19 per cent to hit an intraday low of Rs 12.05.