Tata Teleservices has announced that it will be opting for the voluntary option of paying the interest on the deferred adjusted gross revenue (AGR) dues by offering the government equity against it. The telecommunications company had earlier also opted for the four-year moratorium on the AGR dues. With this move, Tata Teleservices won’t have to worry about paying the interest on deferred dues anymore, which would have made for a considerable amount over the four years.
Tata Teleservices Might Have to Give Up 9.5% of the Company to Govt
In a filing at the regulatory exchanges, Tata Teleservices said that the net present value (NPV) of the interest is expected to be approximately Rs 850 crore, subject to the confirmation by the Department of Telecommunications (DoT).
Further, the filing said that the average price of the company’s shares at the relevant date of August 14, 2021, as per the calculation method provided in DoT’s Communication, works out to be Rs 41.50 per share, also subject to the final confirmation from the telecom department.
If the conversion happens, the current shareholders of the company would be diluted, and the government is expected to hold approximately 9.5% of the company.
Vodafone Idea (Vi), also in a regulatory filing earlier today, announced that it is accepting the option of converting the pending interest dues related to the spectrum into equity for the government. As per Vi’s estimates, the government would end up owning 35.8% of the company if the equity conversion takes place.
This would dilute the current promoters, including the Vodafone Group Plc and the Aditya Birla Group majorly which would then only own 28.5% and 17.8% of the company, respectively. The Indian government would effectively become the single largest equity holder of Vodafone Idea, a private telecom operator. The government’s interest in getting all this equity of a private telecom company seems to be a little strange as it already has struggling telecom ventures in the form of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).