Vodafone Idea shares tanked as much as 19 per cent on Tuesday after the telecom company’s board approved a plan to convert the full amount of interest related to spectrum auction installments and adjusted gross revenue (AGR) dues into government equity.
In such a scenario, the government will become the single largest shareholder in the telecom firm with a stake of 35.8 per cent. According to the company’s estimates, the net present value of the interest is expected to be Rs 16,000 crore.
In early trade on Tuesday, Vodafone Idea shares tanked 19 per cent on the stock exchanges, following the board’s approval to conversion of interest on spectrum and AGR dues. At 12 pm, shares of Vodafone Idea were down 13.80 per cent at Rs 12.80.
“It is expected that the government will hold around 35.8 per cent of the total outstanding shares of the Company, and that the Promoter shareholders would hold around 28.5 per cent (Vodafone Group) and around 17.8% (Aditya Birla Group), respectively,” the telecom firm said in a regulatory filing.
It may be noted that the telecom company’s board held a meeting earlier where the conversion of the full amount of interest related to spectrum auction installments and AGR dues into equity was approved.
Likhita Chepa, senior research analyst at CapitalVia Global Research, told news agency Reuters that dilution in stake is something that the promoters or existing shareholders do not welcome.
“Somewhere around 10 per cent to 15 per cent of dilution to the government would have been welcomed,” she added.
Vodafone Idea shares had been falling over the last three trading sessions, with the stock falling over 13 per cent. While Vodafone Idea shares gained over 14 per cent in one year, it has lost nearly the same amount since the beginning of the calendar year.
The fresh decision has been taken by the company’s board as part of the process to rescue the company from a financial crisis. The government has announced several measures last year for the telecom sector and it was aimed at reducing the debt burden on some telecom firms including Vodafone Idea. India Today