Hindustan Times ST (Mumbai) - Live
After Birlas commit funds, govt agrees to take equity in Vi
NEW DELHI: The Union government on Friday directed Vodafone Idea (Vi) to issue shares against interest on deferred adjusted gross revenue (AGR) and spectrum dues totalling ₹16,133 crore that India’s No.3 telco owes it.
The culmination of the equity conversion plan comes more than a year after the government made the initial decision and serves as a breather for Vi, with a debt burden of ₹2.2 trillion as of September 2022. The loss-making telco has been struggling to raise ₹20,000 crore in funds via debt and equity since 2021. “We had sought a firm commitment that the Aditya Birla Group would run the company and bring necessary investments. Birlas have agreed, and hence, we have agreed to convert. We want India to be a three-player market plus Bharat Sanchar Nigam Ltd, and ensure healthy competition for consumers,” Union telecom minister Ashwini Vaishnaw said in a statement.
In a stock exchange filing, Vi said, “Ministry of communications, the government of India has, in line with the reforms and support package for telecom sector communicated earlier and the conversion option exercised by the company as provided for therein, passed an order today, i.e. 3 February 2023 under section 62(4) of the Companies Act, 2013, directing the company to convert the NPV (net present value) of the interest related to deferment of spectrum auction instalments and AGR dues into equity shares to be issued to the government of India.” The government has directed that 16.13 billion shares of a face value of ₹10 each be issued to it, and the company will take “all necessary actions forthwith” for the issue, Vi added.
According to an official aware of the matter, government officials held discussions with Vi executives on the company’s business plan to stay competitive before agreeing to proceed with the equity conversion. “There was a delay; we wanted them to show us a clear business plan. We’ve held discussions with them, and they’ve shared the plan with us. Discussions were also on to get bankers on board,” the official said on condition of anonymity.