Vodafone Idea Slips 19% After Board Approves Conversion Of Interest & AGR To Equity

Shares of Vodafone Idea in trade on January 11, 2022 tumbled by a huge 19% on the NSE to Rs. 12.05 per share. This is after the company's board in its meeting on the previous day approved the conversion of the full amount of such interest related to spectrum auction instalments and AGR Dues into equity. The Net Present Value (NPV) of this interest is expected to be about Rs.16,000 crore as per the Company's best estimates, subject to confirmation by the DoT.

As per the company filing, the shares shall be issued to the government at par value of Rs. 10 per share. The conversion shall hence result in dilution of shareholding including that of the promoters. Further, " following conversion, it is expected that the Government will hold around 35.8% of the total outstanding shares of the Company, and that the Promoter shareholders would hold around 28.5% (Vodafone Group) and around 17.8% (Aditya Birla Group), respectively", said the release.

This said the government shall become the single largest shareholder in the highly debt-laden
telecom entity. The company's debt as of March 2021 stood at Rs 1.80 trillion

On the development, the company's market cap tumbled to Rs. 37,499 crore.

Earlier the DoT on October 14, 2021 had allowed several options to telecom companies in connection with the telecom reforms package, including deferment of spectrum auction payment due up to four years, one-time opportunity to opt for deferment of AGR related dues as determined by the Supreme Court by four years and a one-time opportunity to exercise the option of paying interest for the deferment period on the deferred spectrum instalments and AGR dues by way of conversion into equity.

Last, the stock at around 11:39 traded lower by over 13% at Rs. 12.9.

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