Vodafone Idea shares cracked down nearly by 19% as govt to become single largest shareholder

Vodafone Idea (VIL) shares fell nearly 19% on Tuesday as the debt-ridden company stated it will convert around Rs 16,000 crore in interest dues obligation to the government into equity.

The interest on spectrum auction and AGR is estimated to have a Net Present Value (NAV) of around Rs 16,000 crore. All current shareholders, including the promoters, will be diluted as a result of the interest amount being converted to equity.

The government will own about 35.8% of the cash-strapped telecom service provider after this conversion. After the conversion, the promoters will own about 28.5 percent of Vodafone Group and 17.8 percent of Aditya Birla Group.

The government has provided telecom operators the option of paying interest on postponed spectrum instalments and AGR dues for a period of four years by converting the NPV of the interest amount into equity.

The equity shares will be issued to the government at par value of Rs 10 per share, subject to final approval by the DoT, because the average price of the company’s shares at the relevant date of August 14, 2021 was below par value.

“As a result of the conversion, all current shareholders of the company, including the promoters, will be diluted.” Following conversion, the government is estimated to own roughly 35.8% of the company’s total outstanding shares, while the promoter shareholders will control around 28.5 percent (Vodafone Group) and 17.8 percent (Aditya Birla Group), respectively,” according to the filing.

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