Vodafone Idea share tanks over 18% on conversion of AGR dues into equity

Vodafone Idea shares declined over 18% and touched an intraday low of Rs 12.05 on the BSE on Tuesday after the board of directors of the company approved the conversion of the full amount of interest related to spectrum auction instalments and adjusted gross revenue (AGR) dues into equity.

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The stock was trading at Rs 12.90, a decrease of Rs 1.95 or 13.13%, at 10:00 am on BSE. It reached an intraday high of Rs 13.40 and a low of Rs 12.05. 

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“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. Since the average price of the Company’s shares at the relevant date of 14.08.2021 was below par value, the equity shares will be issued to the Government at a par value of Rs 10/- per share, subject to final confirmation by the DoT. The conversion will therefore result in dilution to all the existing shareholders of the Company, including the Promoters,” the telecom player said in a regulatory filing on January 11.

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“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,” it added.

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The Department of Telecommunications gave out numerous alternatives for clearing the statutory dues as part of the relief package in October 2021, following which Vodafone Idea chose to defer payment of spectrum auction instalments and AGR dues by four years.

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However, throughout the moratorium period, the telecom firms were also obligated to pay interest on these debts. The DoT had also offered operators a 90-day period to determine if they wanted to convert the moratorium period’s interest sum into equity.

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While Bharti Airtel similarly chose a four-year moratorium on AGR and spectrum dues last year, the country’s second-largest telecom carrier decided earlier this month not to convert interest on deferred spectrum and AGR dues into equity.