The Securities and Exchange Board of India (SEBI) has approved the Union government's proposal to convert telecom operator Vodafone Idea's dues of over $1.92 billion into equity, news agency Reuters reported on October 20 quoting two senior government officials.
"SEBI (Securities and Exchange Board of India) has approved the government's proposal to come in as a financial investor. This has been communicated to the telecom ministry," one of the officials, who did not want to be named, told Reuters.
Moneycontrol could not independently verify the report.
As per the report, the market regulator has also approved the government's request to classify its shareholding in Vodafone Idea as public float.
This comes after the government had last year had given debt-laden telecom operators an option of paying the interest for four years of deferment on the deferred spectrum instalments and AGR (adjusted gross revenue) dues by way of conversion into equity of the NPV of such interest amount.
The government's stake in Vodafone-Idea after the conversion could be more than 30 percent, Reuters reported quoting the official, which would make it one of the largest shareholders in the company along with UK's Vodafone Group and Aditya Birla Group.
Meanwhile, shares of VIL on October 20 closed 0.59 percent higher at Rs 8.57 apiece on the BSE.
Further, the board of VIL is also scheduled to meet on October 21 to consider a fundraise via issuance of convertible debentures.
“A meeting of the board of directors of the company is scheduled to be held on Friday, October 21, inter-alia, to consider and evaluate a proposal for issuance of debenture securities convertible into equity shares on a preferential / private placement basis to a vendor, subject to regulatory and other statutory approvals as may be required, including approval of the shareholders of the company,” the telco had said in an exchange filing.
To be sure, VIL had earlier decided to opt for converting about Rs 16,000 crore of interest liability payable to the government into equity which will amount to around 33 percent stake in the company while promoters' holding will come down from 74.99 percent to 50 percent.
In this regard, a report by news agency PTI stated that the government had agreed to acquire a stake in the telco after the stock price of the company stabilises at Rs 10 or above.
The company's total gross debt, excluding lease liabilities and including interest accrued but not due, as of September 30, 2021, stood at Rs 1,94,780 crore. The amount comprises deferred spectrum payment obligations of Rs 1,08,610 crore, AGR liability of Rs 63,400 crore that is due to the government and debt from banks and financial institutions of Rs 22,770 crore as of January 11, 2022-- when it offered conversion of interest liability into equity.
(With inputs from agencies)
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