Unlikely for Vi to convert interest on government obligations to equity: IIFL

"Vi is more likely to keep trying to raise money from its promoters and other investors than to allow the government to buy a sizable stake."

According to a note published by brokerage IIFL today, Vodafone Idea is unlikely to choose to convert the interest on its government obligations into equity. By Wednesday, the telecom provider must make a decision regarding the matter.

IIFL stated," according to our calculations, there would be a 52% dilution and the government might wind up with a 34% ownership if Vi were to exercise this option. Its prospects have improved as a result of the recent rate increases of 20% and the likelyhood that Vi has secured the cash necessary to pay back the non-convertible debentures that mature in December 2021 and February 2022. In our opinion, Vi is more likely to keep trying to raise money from its promoters and other investors than to allow the government to buy a sizable stake."

Bharti Airtel declared last Friday that it will pay the interest on the liabilities for deferred spectrum and adjusted gross revenue but would not release equity to the government. In a stock exchange statement on Friday, the business stated that it had told the department of Telecom that it would not be using the option to convert the interest on delayed spectrum and AGR dues into equity.

The government unveiled a raft of policies last October to safeguard the telecom Industry's financial stability. A four year-ban on spectrum and AGR dues is also included. Additionally, the corporations have the option to convert the interest money that results from the aforementioned postponement into stock.