Government could hold largest stake in Vodafone Idea
New Delhi: The government of India could become the single largest shareholder in debt-laden Vodafone Idea Ltd. as the company will be offering its shares in lieu of interest. As the company had availed to the four-year moratorium on the deferred spectrum and AGR dues, it needs to pay interest on the same.
According to the company, the interest amount would be close to Rs 16,000 crore and the shares will be issued at face value – Rs 10/share. Though the Department of Telecommunication is yet to confirm the amount, the dilution upon conversion will be very high.
Vodafone Idea could end up issuing 1,600 crore shares to the government, which will result in a 35.8% stake. The government could become the single largest shareholder in Vodafone Idea. Last week, telecom major Bharti Airtel had informed that it will pay the interest on the deferred spectrum and AGR dues in cash.
The combined promoter – Vodafone Group and Aditya Birla Group – holding would fall to 46.3% from the current 72.1%, while public shareholding would come down to 17.9% from the current 27.9%, upon full conversion.
IIFL Securities on January 10, expected the company to continue with its fund-raising efforts from its promoters and other investors rather than letting the government acquire a significant stake at Rs 10/share.
This conversion does not lead to a reduction in Vodafone Idea’s debt of Rs 1.95 lakh crore. Also, the company is yet to announce a fundraise which is crucial for its survival. The company has already taken shareholders’ approval to raise Rs 25,000 crore.