Shares of Vodafone Idea cracked 14% in early deals on January 11, after the company's board approved the conversion of the full amount of interest related to spectrum auction instalments and adjusted gross revenue (AGR) dues into equity. The conversion will result in dilution to all the existing shareholders of the Company, including the Promoters.
At 9:55am, the scrip traded at Rs 12.90 apiece on the BSE, down 13.13%, while the benchmark Sensex was up 34.54 points or 0.06% at 60,430.17.
According to Vodafone Idea estimates, the Net Present Value (NPV) of this interest is expected to be about Rs 16,000 crore.
"Since the average price of the Company’s shares at the relevant date of 14.08.2021 was below par value, the equity shares will be issued to the Government at par value of Rs 10/- per share, subject to final confirmation by the DoT. The conversion will therefore result in dilution to all the existing shareholders of the Company, including the Promoters," Vodafone Idea said.
After the conversion, the government is set to hold over 35% stake in the company. "Following conversion, it is expected that the Government will hold around 35.8% of the total outstanding shares of the Company, and that the Promoter shareholders would hold around 28.5% (Vodafone Group) and around 17.8% (Aditya Birla Group), respectively," it added.
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As a part of relief package in October 2021, the Department of Telecommunications had laid out various options for clearing the statutory dues, following which, the Vodafone Idea opted for deferring payment of spectrum auction installments & AGR dues by 4 years.
However, the telecom companies were also required to pay interest on these dues during the moratorium period. The DoT, had further given a 90-day window to the telcos to decide if they want to opt for converting the interest amount pertaining to the moratorium period into equity.
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