Vodafone Idea Says The Government Can Take The Stake Even If The Shares Are Below Par

Vodafone Idea Says The Government Can Take The Stake Even If The Shares Are Below Par

November 1, 2022: Debt-laden Vodafone Idea mentioned in a statement that mobile tower giant Indus Towers had wrongly mentioned that DoT can convert telco’s AGR dues into equity only after it stabilizes above the par value of 10.

India’s struggling third-tier telecom player has clarified that there is no rule that prevents the Department of Telecommunications (DoT) from taking equity in the telecom, even if the company’s shares are trading below their par value.

The debt-laden company said in a statement that the quarterly report of mobile tower giant Indus Towers had falsely mentioned the existence of such a rule, citing the Companies Act.

“We have received certain media reports which have falsely attributed the undervaluation of shares as the reason for the delay in government equity conversion of VIL.

We have taken up the matter with Indus Towers for corrective action,” said an ET report, quoting the Aditya Birla Group and Vodafone Group joint venture.

It may be mentioned here that Indus Towers said that as per the provisions of the Companies Act, the share price of the loss-making telco is Rs. DoT can convert Vi’s accrued interest on deferred Adjusted Gross Revenue (AGR) dues into equity only after it stabilizes above par at 10.

However, the tower company has removed a key paragraph from its July-September quarterly report. “In September 2022, the finance ministry approved a proposal to convert Rs 16,130 crore worth of accrued interest on deferred AGR-related dues into equity, and now the DoT needs to finalize the transaction,” Indus said.

Industry insiders believe that the delay in the equity issue has affected the telco’s fundraising plans. Also, VI is yet to tie up a 5G equipment supply deal and the Center has sought details of its business plans.

The equity conversion will give DoT a 33 percent stake and through a mix of debt and equity, its much-delayed Rs. 20,000 crore in funding that would make him the largest single shareholder in VI, especially with potential investors seeking clarity on the issue.

Currently, the cash-strapped telecom operator needs money to pay off huge vendor dues, with Indus Towers alone owing around Rs. 7,000 crores included.

Some media reports mentioned that Sindhu had asked Vee to clear dues and make timely payments every month for business continuity after November.

Earlier this month, the Securities and Exchange Board of India (Sebi) green-lighted the Centre’s plan to convert over $1.92 billion of debt into equity through Vi, news agency Reuters reported, citing two senior government officials.

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