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Ministry of Finance cleared a proposal to convert the accrued interest on dues related to deferred adjusted gross revenue (AGR) worth Rs 16,130 crore of Vodafone Idea into equity, reported Economic Times.
The telecom department will now have to finalise the transaction according to the package announced earlier.
"It (the equity conversion) has received the finance ministry's nod in line with the approved (telecom relief) package," said an official told ET.
The equity conversion was been pending since January this year, which finally received the government's approval.
With investors seeking clarity on the matter, it is crucial for Vodafone Idea to conclude the Rs 10,000 crore external fundraise via equity. According to reports, the telecom service provider is also engaging with banks to raise another Rs 10,000 crore in debt to invest in 4G and 5G network to compete with rivals such as Reliance Jio and Bharti Airtel.
The government of India will own nearly 33 per cent of Vodafone Idea's equity, and become the single-largest shareholder, provided the Department of Telecommunications finalised the conversion under the telecom relief package. Vodafone will hold 31.8 per cent and ABG, 18.3 per cent, according to Nomura. Also, the co-promoters of VI -- UK's Vodafone Group Plc. and the Aditya Birla Group -- will together continue to hold a combined majority stake of 50.1 per cent.
This Rs 16,130-crore liability is the accrued interest on Vodafone Idea's accumulated licence and spectrum usage charge (SUC) dues levied on AGR and deferred spectrum payments up to FY17. But, the telcos got the option to convert these dues into government equity under the terms of rescue package. Vodafone Idea had opted for the option.
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First Published: Thu, September 08 2022. 09:43 IST