Debt-laden telecom service provider, Vi, formerly Vodafone Idea, which opted for the interest-to-equity conversion scheme of the Department of Telecommunications (DoT), will issue the 35.8 per cent shares to the government on a preferential basis through the Specified Undertaking of the Unit Trust of India (SUUTI), the company’s managing director and chief executive officer, Ravinder Takkar, said.
“Following conversion, the government will likely hold around 35.8 per cent stake while both the promoters (Vodafone Group and Aditya Birla Group) will jointly 46.3 per cent. The equity shares will be issued post confirmation of the final amount, as well as some procedural clarifications from the DoT. We believe the entire exercise will be completed in the coming months,” Takkar said at a virtual press conference on Wednesday.
Currently, Vodafone Group owns close to 45 per cent of Vodafone Idea, while Aditya Birla Group owns roughly 28 per cent stake.
Vi had early morning on Tuesday said that its board of directors had approved the company’s plan to opt for the DoT’s offer of converting interest on deferred spectrum auction payments and adjusted gross revenues (AGR) to equity.
In its release to the exchanges, Vi said the net present value of interest related to spectrum auction dues and AGR would come to around Rs 16,000 crore.
Since the average price of Vi’s shares on August 14, 2021, which the Supreme Court decided would be the cut-off date, was below par value, the company would issue shares to the Government at par value of Rs 10 per share.
By another resolution, the current promoters also agreed to amend the shareholder agreement and brought down the minimum qualifying shareholding threshold from 21 per cent to 13 per cent.
This means that both Vodafone Group and Aditya Birla Group will continue to hold rights to make important decisions about the company, such as appointment of directors and other key officials.
On Wednesday, Takkar also clarified that though the government would be the single largest shareholder post the equity conversion, it had not expressed any interest in running the company.
“In all of our interactions with the government…it has been very clearly stated that they do not want to run this company. They do not have the desire to take over the operations of the company. They want three private players in the market and certainly do not want a duopoly or monopoly,” Takkar said.
Vi, which is reeling under debt in excess of Rs 2 lakh crore, has been looking to raise funds from investors for quite some time. The government’s offer of deferred payment of adjusted gross revenue dues came as a major breather for Vi, which owed the Department of Telecommunications (DoT) more than Rs 58,000 crore just as AGR.
On Wednesday, Takkar also said that its plans to raise funds could materialise soon. He, however, refused to provide any details on the timeline.
Analysts, however, believe that in order for the company to survive the long run, it will have to raise tariff in the coming times, and aim for an average revenue per user (ARPU) of up to Rs 300, which is nearly three times the current ARPU of Rs 109.