Indian Govt. to have a third stakes in Vi, becoming its largest shareholder

Government of India will hold 35.8% stake in Vodafone Idea, becoming its only largest stakeholder

Vodafone Idea’s board has informed the telecom department (DoT) that it will opt to convert interest and adjusted gross revenue (AGR) dues on spectrum into government equity. Thus, the government would hold a 35.8% stake and become the single largest shareholder in the country’s third largest telecom company. After the conversion, the promoter’s stake will become around 28.5 % of Vodafone Group and 17.8% of Aditya Birla Group.

Vodafone Idea Ltd on Tuesday said its board has approved conversion of the entire amount of interest related to spectrum auction instalments and AGR dues into equity.

The Net Present Value (NAV) of interest on spectrum auction and AGR is expected to be around Rs 16,000 crore. The conversion of the interest amount into equity would weaken all the existing shareholders including the promoters.

The company’s total debt as of March 2021 was Rs 1.80 lakh crore. Vodafone Idea shares fell 14 per cent in the initial deal on January 11. 

Vodafone Idea Board has also taken note of the proposed changes in the existing SHA and accordingly, recommended changes in the Association of Associations (AOA) for authorised execution of the same and for giving effect to the changes in the SHA. The amendments to the AOA subject to the approval of the shareholders at the Annual General Meeting, the company said.

On October 14, 2021, the DoT had provided various options to the service providers with regard to the telecom reform package, which includes deferment of spectrum auction payments for up to four years, opportunity to exercise the option of deferment of AGR dues fixed by the Supreme Court for four years and pay interest for the deferred period for deferred period and AGR dues through conversion bar opportunity. 

Vi’s latest decision also raises questions about its fund-raising plans. Vi has been in discussions with global investors for nearly two years to raise Rs 25,000 crore, but after the announcement of relief measures, the company was expected to re-evaluate its fund-raising needs.