Vodafone Idea surged 23.80% to Rs 8.53 after the government agreed to convert the telecom operator's interest dues into equity.
Vodafone Idea, in an exchange filing, said that the government directed it to issue shares worth Rs 16,133.10 crore at an issue price of Rs 10 per share."The Ministry of Communications, Government of India has, in line with the Reforms and Support Package for Telecom Sector communicated earlier and the conversion option exercised by the Company as provided for therein, passed an order today i.e. 3 February, 2023 under section 62(4) of the Companies Act, 2013, 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 telco said in a statement on 3 February 2023.
"The total amount to be converted into equity shares is Rs 16133,18,48,990. The Company has been directed to issue 1613,31,84,899 equity shares of the face value of Rs 10 each at an issue price of Rs 10 each," it said.
The company said it will take all necessary actions forthwith to undertake the aforesaid issuance.
In 2021, the Department of Telecommunications (DoT) provided various options to the company in connection with Telecom Reforms Package. The package allowed telcos to convert interest on deferred adjusted gross revenue (AGR) owed to the government into equity.
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Later, debt-ridden VIL opted for converting government dues into equity as part of the telecom reforms package. After conversion into equities, the Union government will hold around 33% in the company while telco's promoters United Kingdom's Vodafone Plc and India's Aditya Birla Group (ABG) will collectively hold around 50% in the company. Public would hold the rest of the shares in the company.
VIL's board in June 2022 approved the deferment of AGR-related dues by four years with immediate effect in keeping with the Department of Telecommunications (DoT) order issued on 15 June. The amount of AGR-related dues stated in the DoT letter is Rs 8,837 crore and is subject to revision on account of disposals of representations, Comptroller and Auditor General of India, Special Audit, and any other outcome of litigation. The final amount will have to be paid in six equal annual tranches post moratorium period starting from 31 March 2026.
The government has given telecom operators an option of paying the interest for four years of deferment on the deferred spectrum instalments and AGR (adjusted gross revenue) dues by way of conversion into equity of the NPV of such interest amount.
Vodafone Idea is an Aditya Birla Group and Vodafone Group partnership. The company provides pan India voice and data services across 2G, 3G and 4G platforms.
Meanwhile, a foreign broker reportedly maintained its 'sell' rating on the Vodafone Idea stock with a target price of Rs 6 per share. The broker reportedly stated that it believed that the company will still be in crisis to fund annual spectrum payments beyond the four-year moratorium. The company will be in crisis unless ARPU reaches Rs 300, it said.
Vodafone Idea reported a consolidated net loss of Rs 7,595.5 crore in Q2 FY23 as against a net loss of Rs 7,132.3 crore recorded in the same period last year. Revenue during the quarter increased by 12.8% to Rs 10,614.6 crore in the second quarter. The teleco had posted a revenue of Rs 9,406.4 crore in Q2 FY22.
ARPU improved to Rs 131, up 2% QoQ from Rs 128 in Q1FY23. On a YoY basis, ARPU witnessed strong growth of 19.5% aided by tariff hikes and migration of subscribers to unlimited plans.
The total gross debt (excluding lease liabilities and including interest accrued but not due) as of 30 September 2022 stood at Rs 2,20,320 crore, comprising of deferred spectrum payment obligations of Rs 1,36,650 crore (including Rs 17,260 crore towards spectrum acquired in recent spectrum auction) and AGR liability of Rs 68,590 crore that are due to the Government, and debt from banks and financial institutions of Rs. 15,080 crore. Total gross debt as of 30 September 2021 was Rs 1,94,780 crore.
Cash & cash equivalents were at Rs 190 crore as of 30 September 2022 as against Rs 250 crore as of 30 September 2021.
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