Tag: Vodafone-Idea

Vodafone Idea gains most in three years after govt agrees to convert interest dues into equity

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of debt-ridden telecom operator Vodafone Idea have gained nearly 22 percent on Monday – their biggest single-day jump since November 2019. The surge comes after the government cleared a proposal to convert its interest dues of Rs 16,133 crore into equity.

Vodafone Idea on Friday informed the bourses that post the conversion of interest dues into equity, the government will become the single-largest shareholder in the company with a 35.8 percent stake.

The company has been directed to issue equity shares of the face value of Rs 10 each. Vodafone and Birla Group will have a stake of 28.5 percent and 17.8 percent respectively.

Along with shares of Vodafone Idea, those of Indus Towers are also witnessing double-digit gains on Monday as the former is the tower company’s major customer.

Indus Tower reported a net loss of Rs 708 crore for the December quarter, citing a persistent shortfall in collections from a “major customer,” which was Vodafone Idea.

The telecom infra company last month made a provision of doubtful debt worth Rs 2,298.1 on account of troubled balance sheet of Vodafone Idea. It had earlier made a provision of Rs 1,770 crore in the September quarter, adding to the Rs 1,232 crore it had already provided in the June quarter, taking the total provisions past Rs 5,000 crore.

Indus Towers has earlier warned Vodafone Idea of swifter repayment of dues, failing which it will discontinue their services. The current receivables from Vodafone Idea for Indus Towers are close to Rs 7,000 crore.

Vodafone Idea had failed to repay its January 2023 installment of pending dues to Indus Towers, people with knowledge of the matter told CNBC-TV18.

Shares of Vodafone Idea are trading 21.1 percent higher at Rs 8.3, while those of Indus Towers are also trading 13.5 percent higher at Rs 163.05.

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India finally clears conversion of Vodafone Idea’s interest dues, to take 34% stake in telco

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Debt-ridden telecom operator Vodafone Idea Ltd (VIL) on Friday said the central government has approved the conversion of Rs 16,133 crore interest dues into equity, which will amount to around 35.8 percent stake in the company.

Equity shares of face value of Rs 10 each will be issued to the government at the same price.

“…it is hereby informed that Ministry of Communications…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… 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 company said in an exchange filing.

Further, it said, “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.”

Post the conversion, the government will become the largest stakeholder in the company with 35.8% stake. Vodafone and Birla Group will have a stake of 28.5% and 17.8% respectively.

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The government has given telecom operators an option of paying interest for the 4 years of deferment on the deferred spectrum instalments and AGR dues by way of conversion into equity of the NPV of such interest amount.

Earlier the government had insisted that the telecom operator will have to infuse funds as it needs capital either in the form of equity or debt to keep it running.

Telecom Minister Ashwini Vaishnaw, in an exclusive interview with CNBC-TV18’s Shereen Bhan on the sidelines of the World Economic Forum in Davos, stated, “Vodafone needs capital. And capital has to come either in the form of equity capital or debt capital. Conversion is a non-cash transaction and non-cash transactions are not going to bring capital.”

This was after the telco’s key promoter and Chairperson of the Birla Group Kumar Mangalam Birla met Vaishnaw.

The company’s total gross debt, excluding lease liabilities and including interest accrued but not due, as of September 30, 2021 stood at Rs 1,94,780 crore. The amount comprises deferred spectrum payment obligations of Rs 1,08,610 crore, AGR liability of Rs 63,400 crore that are due to the government and debt from banks and financial institutions of Rs 22,770 crore.

The company is governed by shareholders who hold at least 21 percent stake in the entity as per the shareholders agreement (SHA). However, VIL will now amend shareholders’ agreement in light of the conversion of interest into equity to reduce the threshold level for governing rights to 13 percent from 21 percent.

VIL is the only telecom operator which is yet to place purchase orders for 5G services equipment and has been struggling to pay dues of its vendors.

Indus Towers last month made provision of doubtful debt worth Rs 2,298.1 on account of troubled balance sheet of VIL.

It is in process of issuing optionally convertible debentures of up to Rs 1,600 crore to vendor American Tower Corporation to clear its dues.

Shares of VIL closed at Rs 6.89 apiece on Friday at the BSE, up by 1.03 per cent compared to previous close.

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Vodafone Idea, Indus Towers shares rise ahead of former’s board meet today

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of debt-ridden telecom operator Vodafone Idea and tower company Indus Towers are up for the second day running ahead of Vodafone Idea’s board meeting today to consider the preferential issue of optionally convertible debentures (OCDs) to ATC Telecom Infrastructure Pvt. Ltd.

Besides the allotment of OCDs, the board will also look to convene an Extraordinary General Meeting of to seek approval of the shareholders in this regard.

Earlier, the company had informed the stock exchanges that the shareholder resolution on November 21, 2022, approving the preferential issue of OCDs to ATC Telecom had lapsed as the OCDs could not be issued within the prescribed period of 15 days from approval.

Further, a fresh approval of the shareholders would be sought as required under the rules.

Since its merger, Vodafone Idea has faced a cumulative loss of Rs 1.75 lakh crore and its total debt stands at Rs 2.2 lakh crore. Its subscriber base went down nearly 42 percent from 422 million to 245 million.

Shares of Indus Towers also gained over 7 percent in intraday trade on Monday ahead of Vodafone’s board meeting. Vodafone Plc owns a 21 percent stake in Indus Towers and also has three seats on the latter’s board. Vodafone Plc pledged its stake in Indus in 2019 to take out loans.

Indus Towers’ board had warned Vodafone Idea in September of discontinuation of services over pending dues that amounted to nearly Rs 7,000 crore. Following this, Vodafone Idea sought softer repayment terms, which led to Indus Towers allowing the telco to make staggered payments by July 2023 to pay up the pending dues.

However, the company said that Vodafone Idea’s promise of making full payments from January 2023 has not materialised.

Vodafone Idea is also plagued with a consistent loss in subscribers. The company has lost close to 1 crore subscribers over the last three months.

Shares of Vodafone Idea are trading 2.2 percent higher, while those of Indus Towers are trading with gains of 5.3 percent. The two-day surge has meant Indus Towers has managed to recoup most of its losses it made on Friday.

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Davos 2023 | Vodafone Idea promoters must infuse money as conversion won’t bring capital: Telecom Minister

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Telecom Minister Ashwini Vaishnaw on Friday said that Vodafone Idea certainly needs capital either in the form of equity or debt to keep it running, indicating that the promoters will need to infuse funds.

In an exclusive interview with CNBC-TV18‘s Shereen Bhan on the sidelines of the World Economic Forum in Davos, Vaishnaw stated, “Vodafone needs capital. And capital has to come either in the form of equity capital or debt capital. Conversion is a non-cash transaction and non-cash transactions are not going to bring capital.”

He said that the government is closely engaged with Vodafone Idea’s shareholders to ensure that enough capital is brought into the company and it survives.

“This is a very complex issue and I wouldn’t like to comment more than this but certainly we are engaged very closely with the current shareholders, and are making sure that enough capital is brought into the company so that it survives.”

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In September 2021, the government had cleared the conversion of outstanding govt dues into equity for telecom companies. Government, however, remained firm on seeking further fund infusion by the promoter of the company stating that equity conversion will be considered post fund infusion by the promoters, but a commitment on the same has not come forth.

Vi promoter and Aditya Birla group Chairman Kumar Mangalam Birla met Minister Vaishnaw earlier this month and discussed the matter.

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In addition to addressing the Vodafone issue, Vaishnaw also discussed the current state of India’s economy, specifically the investment climate. He stated that investors are confident about India’s growth story and are showing renewed interest in investing in the country. He attributes this increased confidence to Prime Minister Narendra Modi’s consistent economic policies and decisions.

Additionally, Vaishnaw highlighted that the government has been successful in attracting investment proposals worth Rs 5,000 crore, with a focus on the telecom and railway sectors. He believes that this is a great opportunity for international investors to look at India as a consistent growth story, with the potential for healthy and consistent growth of 6-8 percent over the next decade.

Further, he noted that India’s digitization efforts were highly praised at the Davos forum, with the country being seen as a talent and innovation destination. Vaishnaw also announced plans for a Vedanta-Foxconn plant, which is set to be operational within 14-16 months.

The Minister also discussed the need for balancing risks for both the private sector and government in the railway industry and announced plans to focus on risk allocation in the sector.

He also stated that India will become a railway exporting nation in the next 3 years and is looking at more sectors for the government’s Production-Linked Incentive (PLI) scheme.

Watch video for full interview

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Troubles mount for Vodafone Idea over non-payment of license fee

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Vodafone Idea” isinid=”INE669E01016″ bseid=”532822″ nseid=”IDEA” sector=”Telecommunications – Service” exchange=”nse”]

The Department of Telecommunications (DoT) is preparing to issue a notice soon to debt-ridden telecom operator Vodafone Idea over the non-payment of licence fees. The company has paid only 10 percent of the licence fee in the last quarter, according to a CNBC Awaaz report.

The DoT will send a show cause notice to the telecom company seeking a reply on why action should not be taken against Vodafone Idea under relevant clauses of the licence agreement.

Of the total Rs 780 crore licence fee, Vodafone Idea has deposited only Rs 78 crore so far.

The department collects fees from each of the 22 telecom circles in India on a quarterly basis. It issues notice even in the case of a single day’s delay in payment of licence fees. Generally, the payment is made on the 15th day of the month following the end of the quarter.

The company was required to pay the licence fee on January 15. Now, it needs to pay the fee along with interest in the next 15 days, according to the CNBC Awaaz report. The telecom operator is yet to pay the full spectrum usage charges.

Earlier this month, the Chairman of Aditya Birla Group, Kumar Mangalam Birla met the telecom minister Ashwini Vaishnaw and sought to expedite the process for converting license fee and spectrum dues of telecom major Vodafone Idea to government equity.

In September last year, the government allowed the conversion of outstanding government dues into equity for telecom companies. The Securities and Exchange Board of India (SEBI) and the Finance Ministry cleared the conversion of dues into equity in May and July 2022.

Since its merger, the telecom company has faced a cumulative loss of Rs 1.75 lakh crore and its total debt stands at Rs 2.2 lakh crore. Its subscriber base went down nearly 42 percent from 422 million to 245 million.

Shares of Vodafone Idea ended 2.05 percent higher at Rs 7.45 on Thursday.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

SEBI approves government proposal to convert Vodafone Idea debt to equity

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vodafone Idea has been waiting for the government to convert debt to equity. According to Reuters, market regulator SEBI has approved the government’s proposal to convert its pending deals into equity.

This is significant since the SEBI approval was needed because the government had to convert its stake for Rs 11.80, while the Vodafone Idea stock price was below the face value of Rs 10.

As a result, the SEBI rules did not permit it, which is why the government sought clearance from the regulator. Now that it has happened, it clears the way for the government to convert.

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What does this equity conversion pertain to?

The conversion of interest on AGR dues which stand at Rs 16,130, which means that once the government converts the interest on AGR dues into equity, the debt on Vodafone Ideas books comes down by Rs 16,000 crore, and the government will be holding close to about a 33 percent equity stake.

This paves the way for the government to go ahead and convert its stake.

Only once the government converts its stake into equity will external funding be possible for Vodafone Idea. Vodafone Idea is seeking to raise about Rs 10,000 crore of equity funds and Rs 10,000 crore of debt from banks to fund its 5G plans, but this has been on hold because of a lack of clarity on if and when the government will convert that equity.

There is a board meeting that Vodafone Idea has scheduled tomorrow where they will consider the issuance of convertible debentures to a vendor.

The significant news from hereon will be if the government now converts its stake into equity, the timeline, and will external funds and investors be committing money to Vodafone Idea.

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Vodafone Idea to soon roll out 5G — Kumar Mangalam Birla says unique use case ensures safety of workers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Kumar Mangalam Birla, Chairperson of Aditya Birla Group, said Vodafone Idea’s “unique (5G) use case addresses the need for safe working conditions for workers at infrastructure and construction sites by leveraging digital infrastructure and 5G”.

At the launch of 5G services, he announced that 5G use cases for Indian enterprises and consumers and acquisition of spectrum auction will be followed by the rollout. “We will soon begin the 5G rollout journey,” Birla said.

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He also added that the telecom industry will further ignite the digital dreams of 1.3 billion Indians and thousands of enterprises. “It’ll set the stage for the country to become 5 trillion dollar economy in the next next years with a trillion dollar contribution,” he said.

“It will demonstrate how the 5G network can be used in India for ensuring workers safety and efficiency in the supervision of  critical construction sites,” he said.

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Vodafone Idea currently has 240 million citizens connected to its network with 50 percent of them in rural India, Birla said during the launch at the India Mobile Congress in New Delhi on Saturday.

He added that the government policies like Gati Shakti and Make in India will play a crucial role in catalysing required investments to the sector.

Prime Minister Narendra Modi launched 5G mobile services at the India Mobile Congress in New Delhi on Saturday. Addressing the event, Reliance Industries chairperson Mukesh Ambani said India might have started late in rolling the 5G services but will definitely finish first. He was speaking at the launch event of 5G in India.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indus Towers warns Vodafone Idea of service closure over non-payment of dues

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indus Towers board has warned telecom operator Vodafone Idea of service closure over non-payment of dues, sources told CNBC-TV18 on Wednesday.

Following the development, Vodafone Idea shares were trading flat at Rs 9.16, up 0.22 percent from the previous close.

In a board meeting held on Monday, Indus Towers’ board expressed concern about the mounting dues and non-payment from Vi. Following the meeting, Indus Towers’ board has written to the telco seeking immediate repayment of past dues and sought regular payment henceforth.

One is that the entire independent board was very upset with long pending overdue from Vodafone Idea to the tune of Rs 7,000 crore, which it wants to be cleared as soon as possible.

Secondly, for the last few months or quarters, the telco has been only paying 40 to 50 percent of the overdue. From this month itself, the board has insisted that almost 80 to 90 percent of the money should be paid and from November they want 100 percent to ensure Indus Towers renders its services.

Lastly, if Vi fails to clear the dues post-November, there is a clear threat of the services getting disrupted.

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If the tower company stops towers’ access to Vi,  the services to over 255 million subscribers of the cash-strapped telco will be seriously hit. The warning comes as the company had made a doubtful debt provision of Rs 1,232.6 crore in the April to June quarter.

Vi, Indus Towers, and Bharti Airtel did not revert to queries sent by CNBC-TV18 by the time of publishing this article.

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As Vi’s cash crunch continues, it remains to be seen whether promoter entities will be able to infuse fresh capital into the telco. The second big concern is whether the government will convert the spectrum dues into equity. Until Vi promoters don’t infuse money, the government is reluctant to put in money and convert spectrum dues into equity.

The third issue that the firm stares at is that if the telco faces a service disruption from Indus Towers’ end post-November, what shall happen to its services, It must also be noted that Vi is not in the race for 5G, so there shall be a big shift in customers.

Catch latest stock market updates on CNBCTV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Jio adds 29.4 lakh mobile subscribers in July, Airtel gets 5.13 lakh new users: TRAI

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Billionaire Mukesh Ambani-led Reliance Jio gained 29.4 lakh mobile subscribers in July 2022, as per data released by the sector regulator on Thursday, September 15.

Sunil Mittal-led Bharti Airtel added 5.13 lakh subscribers in July, taking its mobile user tally to 36.34 crore.

According to monthly subscriber data from the Telecom Regulatory Authority of India (TRAI), Reliance Jio gained 29.4 lakh mobile users, taking its mobile customer count to 41.59 crore.

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Vodafone Idea lost 12.42 lakh wireless subscribers, and its subscriber base slid to 15.42 crore in the same period.

Overall, TRAI data showed that India’s total wireless subscribers count increased marginally to 114.8 crore at the end of July 2022.

Wireless subscriptions in urban areas increased to 62.6 crore at the end of July, while subscriptions in rural markets decreased to 52.1 crore.

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Monthly growth rates of urban and rural wireless subscriptions were 0.20 percent and -0.12 percent, respectively, TRAI said. On a month-on-month basis, the total number of broadband subscribers increased to 80.7 crore in July-end.

The private service providers held a 90.12 percent market share of the wireless subscribers, while BSNL and MTNL, the two PSU access service providers, had a market share of only 9.88 percent.

Disclaimer: RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow