The Indian government is not keen to raise its stake in the financially beleaguered telecom operator Vodafone Idea (VIL) and wants the company to first raise investments on its own. The government will study the matter of further converting Vodafone Idea's dues into equity only if no other options are available, Business Standard reported, citing officials.
Also Read: Vodafone Idea Says It Can’t Furnish Rs 6,051 Crore BG: Report
CEO Repeatedly Stated the Terms of the 2021 Relief Package
"Since early 2024, Vi chief executive officer Akshaya Moondra has repeatedly said the terms of the 2021 financial relief package allow it to seek further conversion of dues owed to the government into equity. Regarding his latest letter to the Department of Telecommunications (DoT) seeking the same," the report quoted officials as saying.
"Telco should tie up major debt funding, dues need to be paid back, government feels," according to the report.
VIL's Request for Additional Equity Conversion
In a letter to Telecom Secretary Neeraj Mittal on March 11, VIL requested a further conversion of its dues into equity. If approved, the government's stake in the company could rise from 22.6 percent to 49 percent, sources said, as per an earlier report.
"We urgently require cash flow support from DoT for AGR and spectrum instalments falling due... AGR dues and spectrum instalments for 2012, 2014, 2015 and 2016 auctions may be permitted for equity conversion at the earliest as envisaged under the Telecom Reform Package 2021," Moondra reportedly stated in a March 11 letter to the DoT secretary. According to Vi's letter, total equity conversions would amount to Rs 36,950 crore "on an NPV (net present value) protected basis."
Also Read: Vodafone Idea Seeks Further Government Support Amid AGR Dues Pressure: Report
Government Rejects AGR Waiver
Vodafone Idea currently owes Rs 36,950 crore in AGR and spectrum dues and must immediately pay Rs 13,089 crore in the coming weeks. The company has stated it lacks the ability to make these payments and is seeking relief under the 2021 Telecom Relief Package, according to previous reports.
The request comes amid reports that the government has rejected any waiver on AGR dues. A proposed reduction in AGR liabilities could have offered Vodafone Idea Rs 52,000 crore in relief, cutting its total debt by 25 percent.
