![Govt. to become largest shareholder in Vi after owning 35.8% stake Govt. to become largest shareholder in Vi after owning 35.8% stake](https://varindia.com/storage/news/uploads/2018/02/63e1e0fcc134d.jpg)
After Vodafone Idea (Vi) decided to convert interest on deferred spectrum and adjusted gross revenue (AGR) dues into equity, the government is set to own 35.8 per cent in the financially-stressed telco. This investment will make the Union government the single-largest shareholder in Vi.
Besides Vodafone Idea, the government would also own 9.5 per cent in Tata Teleservices (Maharashtra) Limited (TTML) through the same route, according to announcements made on Tuesday. The government holding in telcos in the country will now go to four, including two state-owned firms — Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).
The promoter shareholding in Vodafone Idea, which is a joint venture between the Aditya Birla group and UK-headquartered Vodafone, will now get diluted to 46.3 per cent from existing 72.5 per cent. The government, which had proposed an equity buyout as part of a telecom package last year, will not however take a board seat. The existing management of Vodafone Idea will continue to be in charge of the telco.
TTML, on the other hand, said its board had decided to convert the entire interest amount related to AGR into equity, subject to a mutual agreement on terms and conditions, including governance of the firm after conversion of interest into equity.
Last October, the Union Cabinet had cleared the telecom reforms package and provided telecom companies with the option of four-year moratorium on spectrum and AGR dues. Companies were also granted an option to convert interest on deferred liabilities into equity.
On Monday, Vi’s board decided to exercise the option and approved the conversion of the full amount of interest (with a net present value of around Rs 16,000 crore) into equity. The shares would be allotted to the government at par value of Rs 10 per share. The allotment will happen following confirmation by the Department of Telecommunications (DoT).
The government is likely to hold the shares through the Specified Undertaking of the Unit Trust of India (SUUTI) or by any other trustee-type arrangement.
“The conversion will therefore result in dilution to all existing shareholders of the company including the promoters. Following the conversion, it is expected that the government will hold around 35.8 per cent of the total outstanding shares of the company and the promoter shareholders would hold around 28.5 per cent (Vodafone Group) and around 17.8 per cent (Aditya Birla group) respectively,” the company said in a stock exchange notification.
Currently, the Aditya Birla group holds around 27.7 per cent while Vodafone Group holds 44.3 per cent in the telco.
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