The finance ministry has approved a proposal to convert Vodafone Idea's Rs 16,130-crore worth of accrued interest on deferred adjusted gross revenue (AGR)-related dues into equity, The Economic Times reported on September 8, citing officials aware of the development.
Now, the telecom department has to finalise the transaction as per the package announced earlier, the report said.
"It (the equity conversion) has received the finance ministry's nod in line with the approved (telecom relief) package," the report said, quoting an official aware of the developments.
Moneycontrol could not independently verify the report.
Once the conversion is finalised, the government is expected to own around 33 percent stake and become single largest shareholder in the cash-strapped telecom company. The co-promoters - the UK's Vodafone Group Plc and the Aditya Birla Group - will together continue to hold a combined majority stake of 50.1 percent in the Indian telco. Vodafone will hold 31.8 percent and ABG, 18.3 percent, according to brokerage Nomura.
The Rs 16,130-crore liability is the accrued interest on the telco's accumulated licence and spectrum usage charge (SUC) dues levied on AGR and deferred spectrum payments up to FY17.
As per the government’s relief package, telcos were given an option to convert their statutory dues into government equity. Vodafone Idea had opted for the conversion.
Vodafone Idea also needs to inform the telecom department by September 16 if it would also opt to convert accrued interest on deferred licence fee dues for FY18 and FY19 into equity, the report said. If the telco opts for the second round of conversion, the government could end up holding an additional 5-7 percent equity in the telco, besides the currently expected 33 percent, analysts, told ET.
It may be recalled, in June 2022, the beleaguered telecom player had opted for deferment of AGR-related dues worth Rs 8,837 crore by a period of four years.