Vodafone Idea has accepted the Indian government's offer to defer payment for four years of its outstanding regulatory and spectrum fees. The company said it also agreed to the proposal to convert interest due in the four-year period into an equity stake for the government.
The operator estimates the interest will amount to around INR 160 billion. With the shares issued at par value of INR 10 each, the government will acquire a 35.8 percent stake in Vodafone Idea, making it the largest shareholder. This will dilute Vodafone Group's stake to around 28.5 percent and the Aditya Birla Group to 17.8 percent.
As the existing shareholders agreement is subject to a minimum 21 percent stake for the two main groups, they have agreed to lower the qualifying stake to 13 percent in order to preserve much of the deal. The amendment remains subject to approval by a shareholders meeting.
The outstanding debt relates to spectrum auction licence fees and the Supreme Court ruling on AGR-related dues going back several years. Vodafone Idea had been looking to raise new capital to pay the fees, when the government proposed in September last year new options for operators to manage the obligations.
Vodafone Idea said it received further details in October from the Department of Telecom on ways to restructure its debt. It was given 90 days to exercise the option on interest conversion to equity.
Airtel declines, Tata accepts DoT offer
Rival Bharti Airtel said it did not plan to take up the DoT's offer of converting the interest to equity.
Tata Teleservices, a regional operator in Mumbai, did accept the offer for a four-year deferment and conversion of its AGR-related debt. For an estimated INR 8.5 billion in interest, the Indian government will get a 9.5 percent stake in the Tata subsidiary.
