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Technical issues delay conversion of govt interest dues in Vi to equity

The conversion of the government’s interest dues in Vodafone Idea Ltd to equity will take some time, communications minister Ashwini Vaishnaw said on Wednesday, as some technical issues were still to be resolved.

“It will take some time, there are some technical issues,” he told reporters on Wednesday.

The finance ministry had informed the telecom department earlier this month that it could proceed with the transaction in which the government will end up taking equity proportionate to the interest on dues owed by the No. 3 telco.

The Aditya Birla Group promoted telco is awaiting conversion of interest on dues related to adjusted gross revenues (AGR) for financial years up to FY17 amounting to ₹16,000 crore into equity, after which the government will own about 33% in the carrier, becoming its largest shareholder. The promoter equity will reduce to 50% from almost 75% at present.

The government gave Vodafone Idea the option of a moratorium on payment of dues of ₹16,000 crore as part of the relief package announced in September.

The telecom department has also given the company an option to convert ₹8,837 crore worth of interest on dues into equity. The opportunity to convert the dues was offered to the company last month and will remain valid till 15 September.

The equity holding structure may change following additional equity of ₹436 crore being put in by Euro Pacific Securities, a Vodafone Group Plc entity. The carrier held a special shareholders’ meeting on 15 July seeking approval for the same from shareholders.

Promoters Vodafone Group and Aditya Birla Group together pumped in ₹4,500 crore in March this year. The promoter equity infusion could make it easier for the company to raise additional capital of about ₹20,000 crore in debt and equity from external investors, which has been a tough challenge so far.

Chief executive officer of Vodafone Idea, Ravinder Takkar, who will be replaced by chief financial officer Akshaya Moondra next month, had earlier said the company was closer than ever to securing funding from investors and that promoters were willing to put in more equity if needed.

The company has been under financial duress over the past few years, despite the government’s September rescue package, which offered the struggling telco a moratorium on the deferred spectrum and other payments for four years and the option to convert the interest during the moratorium period into equity. Livemint

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