Vodafone Idea on Tuesday announced that its board has approved the conversion of full amount of interest related to spectrum auction instalments and AGR dues into equity paving way for the government to own 35.8 per cent stake in the embattled telecom company.
“The Board of Directors, at its meeting held on January 10, 2022, has approved the conversion of the full amount of such interest related to spectrum auction installments and AGR dues into equity,” said a company statement.
The promoters – Vodafone Plc., and Aditya Birla Group – will hold 28.5% and 17.5% stake, respectively. This is down from the current shareholding of 44.39% and 27.66%, respectively.
According to the company’s estimates, the value of the interest is expected to be about ₹ 16,000 crore ($2.16 billion). The implied cost of this conversion is Rs 10 a share, a 32% discount on Monday’s (January 10) closing price. The allotment price is based on Voda Idea’s average share price on August 14, 2021, which was below par value.
“The Net Present Value (NPV) of this interest is expected to be about ₹16,000 crore as per the company’s best estimates, subject to confirmation by the DoT. Since the average price of the company’s shares at the relevant date of 14.08.2021 was below par value, the equity shares will be issued to the government at par value of ₹10 per share, subject to final confirmation by the DoT,” the statement added.
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The company has paid the government ₹ 7,854 crore in dues but still owes roughly ₹ 50,000 crore.This rescue was critical for Vodafone Idea, a joint venture between the Vodafone Group and billionaire Kumar Mangalam Birla’s conglomerate that has been losing subscribers to larger peers. India’s telecom sector was disrupted by the entry of Reliance Jio which began a brutal price war forceing some rivals out of the market. The sector’s troubles have also been compounded by the massive dues owed to the Centre.
