Share issue to govt expected in a month's time: Vi CEO Ravinder Takkar

Takkar reiterated that the company's existing promoters and management will continue to be in charge of the company. There will be no government nominees on the board either.

The central government will neither take a seat on the board of Vodafone Idea (Vi) nor manage the company, its Managing Director and Chief Executive Officer Ravinder Takkar said on Wednesday. He reiterated that the telecommunications (telecom) company’s existing promoters and management will continue to be in charge.

Vi also expects to issue shares to the government next month. The company has shared its calculation with the Department of Telecommunications (DoT). Once the amount is certified, shares will be allotted to the government. “My hope is that it will be done in the coming month,” said Takkar.

On Tuesday, the board of the telecom company opted for conversion of interest on deferred spectrum and adjusted gross revenue (AGR) into equity. Vi has estim­ated net present value of the interest at Rs 16,000 crore. That will result in the issuance of 35.8 per cent shares to the government. 

The same will have to be confirmed by DoT. After the issuance of a 35.8 per cent stake to the government, promoter shareholding in the company will come down to 46.3 per cent, from the existing 72.5 per cent. Takkar said both Aditya Birla Group and Vodafone Group remain committed to the business and will continue to guide the company.

“The promoters have accepted significant dilution to support the balance sheet. It is a strong commitment to ensure the company remains healthy,” he added.

In a statement, the Ministry of Communications, too, said telecom companies opting for interest conversion will not become public sector undertakings. The companies will continue to be managed as professionally-run private companies, it said. Takkar said Vi is involved in discussions with potential investors. He said there is huge interest in the telecom sector, following the government's structural reform package in September 2021.

Most investor concerns about the three-player telecom market and liquidity support to telcos have been addressed. Investor feedback on the company's move to allocate shares to the government is positive, he added.After Q2 results, Takkar said Vi will conclude its fund-raising in the current financial year. Without offering any time frame he said the company will make announcements shortly.

The company's stock gained 8.4 per cent and closed at Rs 12.8 on the BSE on Wednesday.

Takkar said Vi has a significant amount of debt and a stretched balance sheet. Most of the company’s debt is owed to the government and the board felt it would be a good option to pare debt by converting it into equity. “We hope the government will make a return on the equity and it is a win-win for every side,” he added.

As of end-September, Vi had gross debt of Rs 1.94 trillion, comprising deferred spectrum obligation of Rs 1.08 trillion, AGR liability of  Rs 63,400 crore, and bank debt of Rs 22,770 crore.