Govt’s Rs 16k cr dues conversion into 33% stake to be completed in coming weeks

Debt-ridden telecom operator Vodafone Idea expects the government to complete conversion of around Rs 16,100 crore dues into 33 percent stake in the company in the coming weeks, a top official of the firm said.

During the company’s earnings call, Vodafone Idea CEO Ravinder Takkar said as part of the telecom reforms package, the company has opted for converting government dues into equity and its proposal has been confirmed by the Department of Telecom (DoT).
Post the conversion, the government will hold a 33 percent stake in the company and promoters’ holding will come down from 74.99 percent to 50 percent, he said.

“We have already opted for deferment of spectrum and AGR dues as well as conversion of interest arising from such deferment into equity. The net present value of the interest liability on moratorium period amounting to Rs 161.3 billion towards AGR dues and deferred spectrum liabilities have been confirmed with the DoT. With this we expect the conversion sub process to conclude in the coming weeks,” Takkar said.
He said as part of the reforms package, the DoT has returned bank guarantees of about Rs 16,000 crore to the company. On March 31, 2022, the company allocated equity shares worth Rs 4,500 crore to the promoters — Vodafone Group and Aditya Birla Group — against their investment of Rs 3,375 crore and Rs 1,125 crore, respectively in the company.

“The combined shareholding of promoters after this preferential issue is 74.99 percent. Post conversion of interest into equity, the government shareholding is expected to be approximately 33 percent while promoters will continue to hold approximately 50 percent on combined basis,” Takkar said.

The board of the company has additionally approved raising of Rs 10,000 crore to support the firm’s business.

“We believe the government reform package and related developments, return of the bulk of bank guarantees and industry-wide tariff hikes and recent fund infusion by the promoters are significant catalysts for the company.

“All these developments are being perceived positively by the investors and lender community hailing our ongoing discussion on further fund raise,” Takkar said.

VIL has reported a narrowing of its consolidated losses to Rs 6,563.1 crore for the fourth quarter ended March compared to the same period of the previous year, while its realisation per user or ARPU improved sharply on a sequential basis aided by November tariff hikes. VIL’s losses were at Rs 7,022.8 crore a year ago, as per a company filing.

Its revenue from operations rose 6.6 percent year-on-year to Rs 10,239.5 crore in Q4 FY22. Seen sequentially, the revenue was up 5.4 percent supported by tariff hikes effective November 25, 2021, the company said in a statement.

The realisation per user measured in terms of ARPU — a key metric for telcos — rose to Rs 124 for the just-ended quarter from Rs 115 in the prior three-month period.

This translated into a sequential increase of 7.5 percent in Average Revenue Per User (ARPU), although the company’s subscriber base declined to 243.8 million against 247.2 million in Q3 FY22, primarily due to the tariff hike. Takkar also said the industry needs more tariff hikes.

“We would like to see ARPU going up to Rs 200 in the short term and then further increase to Rs 250 or higher in the longer term,” he said. As of March 31, 2022, the total debt (including interest accrued but not due) of the group was Rs 1,97,878.2 crore. PTI