Centre to appoint adviser to see Vodafone Idea equity conversion

The government will appoint a transaction adviser to help convert Vodafone Idea's interest liabilities into equity in the company, Mint reported, citing senior government officials.

Vodafone Idea, whose interest dues on spectrum payments and adjusted gross revenue reportedly amount to Rs 16,000 crore, had proposed that the dues be converted into equity, thus, offering the government a 35.8 per cent stake in the country's third-largest telecom company.

The adviser, along with the finance ministry and the department of telecommunications, will decide the government's hold in the company, the publication said quoting government officials.

The transaction, when done, will make the government the highest stakeholder in Vodafone Idea. The move, on the Centre's part, is part of the relief package to the struggling telecom sector. As part of the deal, the government offered telecos a moratorium of four years on the deferred spectrum and adjusted gross revenue (AGR) payments. The interest during the period will be converted into equity.

Also read: Telcos' debt liability will remain post conversion of interest into equity, says Ashwini Vaishnaw

“The transaction adviser will evaluate the quantum and valuation but, overall, the equity conversion will be a straightforward transaction," a government official reportedly said.

Both parties have maintained that the government is not looking to run the operations nor does it want representation on the board of the company, whose debts have mounted to Rs 2 lakh crore.

Once the conversion is successful, besides the government's share, promoter shareholders (Vodafone Group) would hold around 28.5 per cent, while 17.8 per cent will be held by the Aditya Birla Group.

The government has said that it will remain as an investor in the company and will exit at an "appropriate time." It has also maintained that it is not nationalising the company and that it was done to keep healthy competition in the sector, which would run on a duopoly of Airtel and Reliance's Jio in Vodafone Idea's absence.

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