India’s third largest telecom operator Vodafone Idea (Vi) is all set to be acquired by the Indian government. PTI reports that the Indian government will become the largest single shareholder with a 33 percent stake in the debt-ridden telco once the company’s share price stabilizes at Rs 10 or more. The move will reduce promoters’ equity to 50 percent from the current 74.99 percent. For those who don’t know, the Ministry of Finance has already given permission to acquire a stake in VIL (Vodafone Idea Limited). However, as per market regulator SEBI (Securities and Exchange Board of India) norms, the acquisition cannot take place below par value.
This was after Vi failed to raise funds and clear dues. The company’s total gross debt (excluding lease liabilities, including interest but arrears) currently stands at Rs 1,99,088 crore. This amount includes deferred spectrum payment liabilities of Rs 1,16,600 crore, AGR liabilities of Rs 67,720 crore due to the government and debt of Rs 15,200 crore from banks and financial institutions.
Earlier this year, the debt-ridden telco decided to convert its Rs 16,000 crore interest liability to the government into 33 per cent equity in the company. VI offered shares to the government at Rs 10 per share. However, since April 19, the shares have traded below Rs 10. This is preventing V from being taken over by the government.
Over two years, Vi has also been trying to raise funds of Rs 25,000 crore to be precise. But as of March 2022, only Rs 4,500 crore has been secured from its promoter firms, while around Rs 20,000 crore is still outstanding.
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