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Vi, promoters call upon govt to speed up equity conversion

Vodafone Idea and its promoters have called upon the government to speed up the process of conversion of interest on deferred adjusted gross revenue (AGR) dues into government equity, saying it’s critical to the cash-strapped telco’s efforts to raise funds from external investors.

“Senior executives have met officials and said that the conversion would help expedite bringing potential investors on board,” a senior government official said, asking not to be named.

Loss-making Vodafone Idea had declared March end as the deadline for raising fresh funds which will help it to cut debt and invest in its network to take on Reliance Jio and Bharti Airtel more effectively. It began its fund-raising process in the first week of March with its board approving raising of Rs14,500 crore from its promoters – UK’s Vodafone Group and India’s Aditya Birla Group (ABG) – and external investors.

Out of this, the Rs 4,500 crore that it will raise through a preferential share issue at Rs13.30 a share to its promoters or its related entities should be cleared by end of this month, with an extraordinary general meeting of shareholders scheduled for March 26. But raising the more critical Rs10,000 crore from external investors is set to be pushed to the next fiscal year.

The Vodafone Idea stock ended Tuesday down 0.2% at Rs10.05 on the BSE.

Government officials, on their part, say that the process to convert the accrued interest on deferred AGR dues will take its time, since it needs multiple clearances.

“The conversion will go through the normal procedure which includes clearance from DIPAM (Department of Investment and Public Asset Management) and it could be time consuming…that is procedural,” the official said.

Vi earlier this year opted to convert the interest accruing on the deferred AGR payment into government equity. According to the company’s calculation, this would make the government the largest shareholder in the company with a 35.8% stake and its current promoters, Vodafone Group Plc and ABG’s holding in the company would go down to 28.5% and 17.8% respectively. Currently Vodafone Group Plc holds 44.39% stake while ABG has a 27.66% stake in Vi.

However, the government is yet to confirm the company’s calculations and is likely to be one of the major reasons for the delay in raising funds. This, as potential investors would need to know the final shareholding pattern in the company before committing investments. The telco has held discussions to sell a minority stake to global private equity investors, including Apollo Global Management and Carlyle to raise up to $1 billion.

Meanwhile, the government is also considering returning bank guarantees withheld by the Department of Telecommunications (DoT) as security against the AGR payments. Once approved, Vi is likely to get close to Rs 15,000 crore and the company might then have to cough up only 20% of this amount a year before it is due to pay the principal amount of the AGR dues.

Additionally, the operator has appointed SBI Capital Markets to negotiate the restructuring of loans worth Rs 20,000-23,000 crore it is due to repay within the next four years.

End-December, Vi had a cash balance of Rs 1,500 crore and net debt of Rs 1.97 lakh crore. Mac Pro Tricks

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