Telecom: VI offers 35.8% to govt in lieu of dues; share price slumps 19%
virendra pandit
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Mumbai: With the embattled telecom major Vodafone-Idea offering a 35.8 percent stake to the Government in lieu of its mounting dues of over Rs. 16,000 crore, the company’s share price slumped 19 percent on the bourses on Tuesday.
The Vodafone Idea’s Board of Directors had, on Monday, approved the conversion of the Government dues into equity. The company said the equity shares will be issued to the Government at a par value of Rs. 10 per share, subject to endorsement by the Department of Telecommunication.
After the Board’s approval to convert adjusted gross revenue (AGR) and spectrum liabilities dues into equity, the move saw the company’s share price slumping 19 percent to Rs. 12.05 on the BSE in Tuesday’s intraday trade.
With today’s fall, the stock of telecom services providers has corrected 28 percent from its 52-week high level of Rs. 16.79 on December 10, 2021. Nearly 470 million equity shares changed hands at the counter on the NSE and BSE.
“The Board of Directors, at its meeting held on 10th January 2022, has approved the conversion of the full amount of interest related to spectrum auction installments and AGR dues into equity. The Net Present Value (NPV) of this interest is expected to be about Rs 16,000 crore as per the company’s best estimates, subject to confirmation by the Department of Telecommunications (DoT),” Vodafone Idea said in an exchange filing.
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 a 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, the company said.
Following the conversion, it is expected that the Government will hold around 35.8 percent of the total outstanding shares of the company and that the Promoter shareholders would be around 28.5 percent (Vodafone Group) and around 17.8 percent (Aditya Birla Group), respectively.
