Troubled Indian mobile service provider Vodafone Idea said on Friday the government had ordered the company to convert into equity all the dues owed to the government for use of airwaves including the interest related to payments for spectrum.
The total amount to be converted into equity shares is Rs. 16,133 crore, the mobile carrier said.
The company said it has been directed to issue 16.13 billion shares at 10 rupees each. Equity shares of face value of Rs. 10 each will be issued to the government at the same price.
The conversion of Vodafone Idea dues into equity was approved by India’s capital market regulator, Reuters reported in October last year.
“Ministry of Communications…passed an order today ie 3 February, 2023…directing the Company to convert the NPV of the interest related to deferment of spectrum auction instalments and AGR Dues into equity shares to be issued to the Government of India,” the filing said.
The relief for the company comes as part of the reforms package announced by the government in September 2021.
Earlier, VIL had said that with conversion of dues into equity, the government will get around 35 percent stake in the company.
Shares of VIL closed at Rs. 6.89 apiece on Friday at the BSE, up by 1.03 percent compared to previous close. The filing came after market hours.
In 2021, the Indian government approved a rescue package for debt-strapped telecom companies, allowing them to convert interest on deferred adjusted gross revenue owed to the government into equity.
India’s telecom sector was disrupted by the entry of billionaire Mukesh Ambani’s Reliance Jio that forced some rivals out of the market. The sector’s troubles had also been compounded by large dues owed to the government.
The country’s top court in 2020 gave telecom firms 10 years until 2031 to clear the dues.