No response on equity conversion from Centre: Vodafone Idea

Vodafone Idea (Vi) hasn't heard back from the government since April on converting its ₹16,130-crore accrued interest on deferred adjusted gross revenue (AGR)-related dues into equity.

This conversion is said to be critical for the company being able to induct investors and raise funds for expanding its 4G network and outlining its 5G rollout plans.

"We have had no communication from the Department of Telecommunications (DoT) since April when there was an agreement on the amount to be converted...," Vodafone Idea CEO Akshaya Moondra said on Friday.

'Lenders Seek Clarity'
"I also do not know exactly the reason why this is not happening. Government is taking some time." He added that Vodafone Idea had exercised the option to convert in January, which was followed by a discussion with DoT. "They had sent a letter to us in March. And then we had confirmed the amount of conversion, which was agreed between DoT and us, in the month of April...we expect that this (conversion) should happen soon," Moondra said at the company's fiscal second-quarter earnings call with analysts.



The telco in the interim had told the government that its lenders want clarity on the government shareholding before committing funds. ET reported in its October 8 edition that the government, on its part, had asked Vi to present a clear fund-raising plan before it goes ahead with the conversion, leaving the loss-making telco in a catch-22 situation.

Once converted, the government will own about 33% of Vi's equity and become the single largest shareholder in the loss-making entity.

Vi has recently clarified that there is no rule that bars the government from taking equity in the telco, even if the company's shares are below the par value (of Rs 10). This was being cited by some as a reason for the government's delay in the equity conversion. Vi shares closed 1.87% lower at Rs 8.41 on BSE Friday.

Moondra said Vi's lenders and potential investors are aware that the conversion is vital to the pending fundraise, which is required for both 4G coverage expansion and 5G rollout. The telco is the only one among the private carriers who hasn't yet been able to tie up 5G vendor deals, with its partners asking for clarity on payment of pending dues.

Vi's chief executive said the telco has offered to clear dues of its other large vendors by issuing convertible debentures on the lines of American Tower Corp (ATC) deal but is yet to hear from them. He, though, did not specifically name the other vendors. Vi uses Indus Towers for installing radio equipment sourced mainly from Finland's Nokia and Sweden's Ericsson.