Vodafone Idea Limited has announced that the government of India will own at least 36 percent of the nation’s 3rd largest phone operator company after its board has approved the conversion of dues into equity.
The board of directors of Vodafone Idea company has approved the conversion of the amount of interest related to the spectrum auction installments and AGR (Adjusted Gross Revenue) dues into equity, the company reported in a regulatory filing that took place on January 11, 2022.
This decision will lead to the dilution of all the current shareholders of the company which includes the founders of the company, the company has reported. The Vodafone Group Plc will be the owner of around 28.5 percent and the Aditya Birla Group will own around 17.8 percent of the unprofitable wireless carrier. After the conversion, the government is expected to own 35.8 percent of the total outstanding shares of the joint venture.
This rescue plan was significant for the company which is a joint venture between the Vodafone Group and the Birla Conglomerate as it was losing a major part of its consumers to the bigger rivals in the market. As part of its relief package in October 2021, the company was given a bunch of options for clearing out of their statutory dues, after which the company had chosen the deferring of the payments of spectrum auction installments and the adjusted gross revenue dues by four years. The telecom companies were also required to pay the interest on these dues during the moratorium period. The company was given a ninety-day window by the Department of Telecommunications (DoT) to decide in case they wanted to opt for conversion of the interest amount that was pertaining to the moratorium period into equity.
Bharti Airtel Group also opted for the 4-year moratorium on Adjusted Gross Revenue and the spectrum dues last year. But the Vodafone Idea Group did not go for the conversion of interest on the deferred spectrum and AGR dues into equity, as per the decision they made earlier this month.
The financial health of the company had been deteriorating ever since Reliance Jio Infocomm Limited sparked a cruel price war in 2016 and clinched the top position in the market and has maintained that till today. With the government owning 36 percent of the stakes, it will become the single largest shareholder in the telecom operator
