Vodafone Idea offers 35.8% stake to govt in lieu of dues

Tribune News Service

New Delhi, January 11

Shares of mobile company Vodafone India crashed by 21 per cent on Tuesday after the company offered 35.8 per cent of Vodafone Idea’s equity to the Union Government to pay off its spectrum and adjusted gross revenue (AGR) dues.

If the government accepts the proposal, which has been in the air for some time, it will then own three telecom companies. The Centre already owns the partially divested MTNL and the fully owned BSNL, and had tried unsuccessfully to merge both companies before shelving the plan. The acquisition of Vodafone could lead to a greater clash of cultures.

The Department of Telecommunications had offered this option to three private telecom companies — Vodafone, Jio and Airtel — so that they could pay off their dues to the government. Airtel plans to exercise the option of deferring for four years the payment of spectrum auction instalments and AGR dues.

Vodafone Idea is keen on the other option of converting the interest amount of spectrum auction and AGR dues into equity. It was earlier expected to pay off the interest by the recent 20 per cent tariff hike and fresh equity. Its finances are already tight as it has to repay non-convertible debentures maturing by next month.

Shares of Vodafone Idea tanked 20.54 per cent to settle at Rs 11.80 on the BSE. During the day, it dived 22.55 per cent to Rs 11.50. On the NSE, it plunged 20.87 per cent to settle at Rs 11.75.

The company’s market valuation declined by Rs 8,764.24 crore to Rs 33,907.76 crore on the BSE.

The VIL said that since the average price of the company’s shares at the relevant date of August 14, 2021 was below par value, the equity shares will be issued to the government at par value of Rs 10 per share, subject to final confirmation by the Department of Telecommunications (DoT).

If the plan goes through, the government will become the biggest shareholder in the company which is reeling under a debt burden of about Rs 1.95 lakh crore.

“…the board of directors, at its meeting held on 10th January 2022, has approved the conversion of the full amount of such interest related to spectrum auction instalments and AGR dues into equity. The Net Present Value (NPV) of this interest is expected to be about Rs 16,000 crore as per the company’s best estimates, subject to confirmation by the DoT,” Vodafone Idea said in a regulatory filing. (with PTI inputs)

If govt accepts proposal…

• It will become the biggest shareholder in Vodafone India
• It will then own three telecom companies
• The Centre already owns partially divested MTNL & BSNL
• The company’s market valuation declined by Rs8,764.24 cr

21% fall in prices of Vodafone’s share

Rs1.95 lakh cr debt the company faces