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Government to Own 35.8 Percent Stake in Vodafone Idea

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The Government of India is planning to take authority of 35.8 percent stake in Vodafone Idea with the latter’s board approving conversion of dues in to equity, Vodafone says. Shares of Vodafone Idea were trading over 16 percent lower to Rs.12 apiece in the latest opening deals of BSE.

Following the conversion, the Indian government is expected to hold about 35.8 percent of the total outstanding shares of the company, and the promoter shareholders of Vodafone Group will hold around 28.5 percent and Aditya Birla Group around 17.8percent, announced the telecom operator.

The company says, “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 August last year was below par value, the equity shares will be issued to the government at par value of Rs.10 per share, subject to final confirmation by the DoT.”

The Department of Telecommunications (DoT) had provided various options to the company in connection with the Telecom Reforms Package, after which Vodafone Idea's board approved deferring payment over spectrum auction instalments and AGR dues by four years.

This saving plan was critical for Vodafone Idea, as it has been losing customers to bigger rivals, especially after Reliance Jio flashed a brutal price war in 2016, and quickly clinched market share to become the top player.

Bharti Airtel had informed that it will not avail the option of conversion of the interest on deferred spectrum and AGR dues into equity, under the reforms package

The conversion of accrued interest into equity can be done by appealing Section 62 (4) of the Companies Act, and the amount will be treated as a loan until the conversion is completed, according to the DoT.

This month, Bharti Airtel had informed that it will not avail the option of conversion of the interest on deferred spectrum and AGR dues into equity, under the reforms package.

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