Finance Ministry approves Vi's dues to be converted to govt equity

Indian government will hold close to 33% of Vodafone Idea's equity, making it the only major shareholder. Vodafone will hold 31.8% whereas Aditya Birla Group will be owners of 18.3%.

The Ministry of Finance approved a request to convert the accumulated interest on dues relating to Vodafone Idea's deffered adjusted gross revenue(AGR) worth Rs 16,130 into equity according Economic Times.

The purchase must now be completed in accordance with the earlier-announced package, according to the telecom agency. As per the approved telecom relief package, the finance ministry has given a nod to the equity conversion, according to an officials statement to ET.

The government ultimately approved the equity conversion, which was put on waiting since January of this year. It is essential for Vi to complete the Rs 10,000 crore external equity fundraise since investors are looking for clarity on the situation.

In order to hold a strong position against competitors like Reliance Jio and Bharti Airtel, the telecom operator is reportedly also negotiating with banks to raise an additional Rs 10,000 crore in debt. This debt will be used to invest in 4G and 5G networks.

If the Department of Telecommunications(DoT) completes the conversion under the telecom rescue package, the Indian government will hold close to 33% of Vodafone Idea's equity, making it the only major shareholder. Vodafone will hold 31.8% whereas Aditya Birla Group will be owners of 18.3%. The co-promoters of Vi, the Vodafone Group Plc from the UK along with ABG will continue to jointly own a majority interest of 50.1% in the company.

The accured interest on Vodafone Idea's outstanding licence and spectrum usage charge(SUC) debt, which was assessed on AGR and postponed spectrum payments until FY17, totals Rs 16,130 crore. However, as a part of the conditions of the bailout package, the telecoms were given the choice to convert their debts into government stock. Vodafone Idea selected the alternative.