The Board of directors of Vodafone Idea have approved the plan as proposed by the DoT whereby the government would now own 35.8 percent stake becoming the single-largest shareholder
With the Board of leading mobile services provider Vodafone Idea approving the conversion of the full amount of interest related to spectrum auction instalments and AGR (adjusted gross revenue) dues into equity, the central government will become the single-largest shareholder of Vodafone Idea. It would hold 35.8 percent stake while the Vodafone Group (promoter shareholders) would hold 28.5 percent stake. The Aditya Birla Group would retain around 17.8 percent.
Vodafone India said that the Department of Telecommunications (DoT) had offered Vodafone Idea a few options regarding the Telecom Reforms Package. The board had opted for deferment of Spectrum Auction Instalments due up to 4 years, and deferment of AGR-related dues by 4 years in the meetings held on October 18 and October 27 last year.
The DoT had also offered the company a period of 90 days to exercise the option of converting the interest that would accrue on instalment payment during the moratorium period into equity. The NPV of the amount was to be calculated as on the date of exercise of the option.
Vodafone Idea also said that governance and other rights of promoter shareholders are governed by a Shareholders Agreement (SHA). The rights are subject to a minimum qualifying threshold of 21 percent for each promoter group. The promoters, in light of the board’s approval, have agreed to amend the existing SHA to reduce the minimum qualifying threshold to 13 percent from 21 percent. The company said that there will be changes in the company’s Articles of Association (AoA).
“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 company said in a statement.