 "Vodafone Idea to take 4-year reprieve on Rs 8,837-crore AGR dues")
Vodafone Idea (Vi) will take a four-year moratorium on paying Rs 8,837 crore as AGR dues, in addition to the option it exercised last year. The telecom company also has the option to convert interest on the deferred amount into additional equity to the government.
The government will own 33 per cent stake in Vi after an earlier decision to convert interest with net present value of interest worth Rs 16,000 crore into equity. It may get a further 6-7 per cent stake if the company opts for conversion again, said a telecom sector analyst. Vi did not comment on what it plans.
Vi, in a late evening stock exchange notification on Wednesday, said that on June 15 it got a government letter offering four-year moratorium for all AGR dues up to financial year 2018-19.
The company's board has decided to defer the AGR (annual gross revenue) dues of Rs 8,837 crore, it said. The amount is subject to revision on account of disposal of representations and the final amount has to be paid in six equal installments after the end of the moratorium in March 2026.
Vi has to decide on conversion of interest on AGR dues in 90 days.
The government, last September, gave telecom firms an option to defer AGR payments for four years as a part of its telecom reforms package. Companies were also given the option to convert interest on these dues into equity for the government.
The package covered dues up to 2016-17 and that were a part of the Supreme Court order. Vi opted for a moratorium on these dues last October. Airtel too opted for a moratorium and Reliance Jio did not avail of the facility.
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Vi, in January, decided to issue shares to the government as it opted to convert interest with a net present value of Rs 16,000 crore into government equity. The government has confirmed the amount and Sebi, the stock market regulator, has exempted the government from making an open offer to Vi shareholders post share issuance. A media report last week said that the debt conversion would take place 2-3 weeks before the 5G auction.
Promoters own 74.99 per cent stake in Vodafone Idea. The stake will reduce to 50 per cent following the issuance of a 33 per cent stake to the government.
In January, the telecom company decided to issue shares to the government as it opted to convert interest with a net present value of Rs 16,000 crore into government equity.
The company, on Wednesday, also announced capital infusion of Rs 436 crore by Vodafone Group Plc.
However, fund raising from external investors has not materialized as yet. The management had indicated that it is in active discussions with investors and banks for equity and debt. It had also earlier said that investment would materialize after issuance of shares to the government.
The timeline
• September 2021: Government announces telecom reforms package
• Vi and Airtel opt for moratorium of AGR dues, Reliance Jio declines
• January 2022: Vi board decides to convert interest with a net present value of Rs 16,000 crore into equity for the government. With this, the government will own 33 per cent shares in the company
• June 2022: Vi decides to defer payment of AGR dues of Rs 8,837 crore for four years
• Analysts estimate the government could get another 6-7 per cent stake in Vi if it opts to convert interest