Vi, Tata Tele Opt to Convert Interest into Govt Equity

Vodafone Idea (Vi) and Tata Teleservices (Maharashtra) plan to convert money they owe the government into equity, opting for measures included in a relief package for the telecom sector. The government will become the single-largest shareholder in Vi with a possible 35.8% stake in the telco, which will turn interest on spectrum and adjusted gross revenue (AGR) due into equity. The stakes of promoters – Vodafone Group and Aditya Birla Group – will get diluted to 28.5% and 27.66%, respectively. Shares of Vi slumped over 22% on the news.

Tata Teleservices (Maharashtra) has opted to convert interest on AGR dues into equity, giving the government a 9.5% stake in the company, which offers telecom services to enterprises. Its stock rose 5% to end at Rs291.05.

The Vodafone Idea board “approved the conversion of the full amount of such interest related to spectrum auction instalments and AGR dues into equity”, the company said in a notice to the stock exchanges on Tuesday.

The Department of Telecommunications (DoT) has also been informed.

Analysts expect the move to help the cash – strapped telco’s efforts to secure external funding. But they cautioned that potential in vestors will have on the company. The government has made clear it has no interest in running the company. S-ET

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