Vi CEO says conversion of government debt to equity remains an option

Vodafone Idea Ltd.’s dues owed to the government may be converted into equity once again, according to Chief Executive Officer Akshaya Moondra. This opens room for further equity dilution in the company that is going to witness a nearly 26% dilution following the fundraise.
India’s third-largest telecom company is launching its Rs 18,000-crore follow-on public offer this week, in a bid to raise capital as it struggles to hold on to its subscribers.

While the company plans to use these towards vendor payment, launch of 5G services and further CapEx, its debt payments will be at least Rs 30,000 crore (this excludes the new debt it plans to take) from the next financial year, after the moratorium on AGR dues is lifted.

The government is the largest shareholder in the company, with 33% stake. However, this stake will come down to nearly 24% after the completion of follow-on public offer.

However, Moondra added that if the government converts part of the debt into equity once again, its stake may remain near the same level.

With a gross debt of over Rs 2 lakh crore, the company’s debt is likely to balloon even further, as it looks to raise up to Rs 25,000 crore in debt. Of this, Rs 2 lakh crore, or 90%, is payable to the government.

Last week, Vodafone Idea had filed a red herring prospectus for its upcoming follow-on public offer to raise up to Rs 18,000 crore. It had approved a price band of Rs 10-11 per share for its upcoming offer.

Foreign investors GQG and Fidelity Investments are said to invest in Vodafone Idea through the follow-on public offer.

The telecom company is planning to launch 5G services soon, the cash-strapped telecom operator’s CEO said on Monday. The Aditya Birla Group’s firm, that was unable to execute the 5G rollout due to insufficient capital, has completed testing for the rollout and will finally commence deployment of the services soon, he said.

The company expects 5G services to cover nearly 40% of its revenue over the next 10-15 months.

The management said that the telecom player has reduced its financial debt by Rs 17,000 crore over the last two years. The CEO added that there was no ongoing conversation with the government for deferment of debt payment. NDTV Profit