Government To hold 33% Stock In Vodafone Idea Ltd

Centre government approved on Friday the conversion of the telco’s dues linked to interest on the spectrum and adjusted gross revenue (AGR) worth Rs 16,133 crore into equity.

The development comes nearly 13 months after the Vi board cleared the interest conversion. In October 2021, the Union Cabinet cleared the telecom reforms package aimed at improving liquidity and ease of doing business. Telecom companies were offered the option of a four-year moratorium on the spectrum and AGR dues and granted an option to convert interest on deferred liabilities into equity.

Even as the Union Cabinet had cleared a telecom package including conversion of dues into equity in October 2021, the government had put a condition that promoters of Vodafone Idea must infuse funds into the telco before any equity conversion could take place.

At the end of December 2022, the promoters hold around 75 percent of Vodafone Idea, with Vodafone Plc holding 48 percent and Aditya Birla Group 27 percent. After the fresh equity infusion, the shareholding of the promoters will come down to around 50 percent, with the government emerging as the largest shareholder.

In a stock exchange notification, Vi said the Centre had passed an order directing the company to convert the net present value of interest related to the deferment of the spectrum and AGR dues into equity for the government. The company has been directed to issue 16,130 million equity shares at an issue price of Rs 10.

The government will have a 33 percent stake, making it the biggest shareholder in the financially-stressed telecom joint venture between UK’s Vodafone and Kumar Mangalam Birla-owned Aditya Birla Group.

SBI chairman Dinesh Kumar Khara said the company is honoring commitments. “As far as income recognition is concerned it is a performing asset. But we are mindful of stress and wherever required we ensure that we should start building provisions,” the SBI chairman said prior to Vi’s announcement.

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