Vodafone Idea remains sole telco to offer equity stake to govt

Tata Teleservices (TTSL) has withdrawn its proposal to offer equity in lieu of interest on deferred liabilities to the government leaving Vodafone Idea (Vi) as the only telco with an active offer.

The finance ministry is currently examining Vi’s proposal to convert interest on deferred spectrum and adjusted gross revenue dues into equity and the process is expected to be completed in six weeks. Vi has estimated net present value of interest (NPV) at Rs 16,000 crore and that would result in issuance of 35.8 per cent stake to the government.

According to a report in The Economic Times, TTSL has followed in the footsteps of its listed peer Tata Teleservices (Maharashtra) and opted against conversion of interest into equity. TTSL had informed the government of its desire to convert Rs 4,139 crore worth interest into equity but the proposal was withdrawn as the government’s estimate of interest differed from that of the company.

A TTSL spokesperson did not respond to text messages seeking comments.

Last September, the union cabinet approved a relief package for the telecom sector, which included a four-year moratorium on AGR and spectrum payments. Companies were also given an option to convert interest on deferred liabilities into equity.

All the companies chose a four-year moratorium except Reliance Jio. Vi and both Tata Group companies opted for conversion of interest into equity while Bharti Airtel decided not to avail the same.

Now both the Tata Group companies have withdrawn the offer to convert interest into equity. In a stock exchange communication on February 1, TTML said the company’s board decided to withdraw its offer “as the interest amount eligible for conversion is much lesser than as expected and calculated by the company”.

TTML had estimated net present value of interest at Rs 850 crore and that would result in 9.5 per cent stake issuance to the government. As per the Department of Telecommunications, the NPV worked out to be Rs 195.22 crore.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor