Vodafone Idea opts to convert spectrum interest, AGR dues into equity

The decision, taken by the company’s board of directors in a meeting on January 10, comes days ahead of the 90-day deadline provided for equity conversion by the government, when they imposed a four-year moratorium on payment of spectrum charges and dues. option was selected.

“The Net Present Value (NPV) of this interest is expected to be approx. 16,000 crores as per company’s best estimates, subject to confirmation by DoT. Since the average value of the shares of the Company as on the relevant date of 14.08.2021 was below par, the equity shares would be issued to the Government at par value of Rs. 10/- per share… Hence the conversion will result in dilution of all existing shareholders of the company, including the promoters,” the telco said.

After conversion to equity, the government is expected to hold 35.8% stake in the country’s third largest carrier, with Vodafone Group holding 28.5% and Aditya Birla Group at 17.8%.

Vodafone Idea said that the governance and other rights of the promoter shareholders are governed by a shareholder agreement (SHA) to which the company is a party and also incorporated in the articles of association of the company.

“The rights are subject to a minimum qualifying limit of 21% for each promoter group, and in light of the conversion of interest into equity, the promoters have mutually agreed to amend the existing SHA to reduce the minimum qualifying limit from 21% to 13. % for the purpose of exercising certain governing powers such as those relating to appointment of directors and appointment of certain key officers etc.,” it said.

The company said that the Board has also taken note of the proposed changes in the existing SHA, and has accordingly authorized execution of the same and also recommended changes in the Association of Associations (AOA) to give effect to the changes in the SHA.

“The amendment to the AOA shall be subject to the approval of the shareholders at the general meeting, for which the Board has authorized the officers of the Company to fix the date of the shareholders’ meeting in accordance with the terms and conditions of the amendment to the existing SHA Board,” the company said.