NEW DELHI: Nine months after converting the dues worth Rs 16,133 crore of Vodafone Idea payable to the government on account of spectrum fee, into equity, the department of telecommunications (DoT) has asked the department of investment and public asset management (DIPAM) whether some portion can be offloaded in the market.
As part of the dues conversion process in February this year, Vodafone Idea issued 16.13 billion equity shares at Rs 10 each to the DoT. On November 20, the company’s share price touched a 52-week high of Rs 15.07. Sources said that since the conversion was done at a price of Rs 10, the DoT wanted to confirm from DIPAM whether a portion can be sold in the market as it will yield revenue to the government. At the current share price, the government’s 33.14% stake in the company is close to Rs 24,300 crore, a near 51% return on its investment.
However, DIPAM officials have informed the DoT that the government has no plan to dilute its stake in Vodafone Idea. “We are in for a long term in Vodafone Idea. It was a relief package and the company needs to do several things in terms of more equity infusion and debt for capex and growth,” officials told Fe.
On Tuesday, shares of Vodafone Idea closed 0.5% lower at Rs 13.28 on the BSE. The share price of Vodafone Idea, however, was at Rs 7 in February, when the government became the single largest shareholder in the company with a 33.14% stake.
The reason for the company’s share price to witness strong gains can be attributed to positive sentiment of investors over its guidance to conclude funding by December end. Vodafone Idea has been trying to raise external funding for a long time now. The company is currently targeting to tie-up equity investments first, which is expected to be concluded by December end, according to Akshaya Moondra, chief executive officer of Vodafone Idea.
Basis the equity funding conclusion, banks will lend to the company, Moondra had said during the July-September quarter earnings call last month.
“The total equity plus bank funding that we are targeting is of a nature that we should be able to use that funding to make the investments,” Moondra said. “And then we improve the operations to a point…where we become self sufficient in terms of cash generation from business being able to meet our requirements largely,” Moondra added.
Even as Vodafone Idea’s board approved plans to raise up to Rs 25,000 crore three years back, analysts said the company would need about Rs 50,000 crore to be able to stabilise the operations and more than Rs 1 trillion to stay in the game.
In the last three years, the promoters have brought in Rs 5,000 crore. In August, one of the the promoters — most likely Aditya Birla group — had also committed to infuse Rs 2,000 crore into the company for meeting impending payment obligations, but Vodafone Idea is yet to receive that.
In September, the company through a bank funding, paid Rs 1,700 crore to the government, which includes the dues for the 5G spectrum and other spectrum acquired previously.
Vodafone Idea’s consolidated loss in the July-September quarter widened to Rs 8,737.9 crore, from Rs 7,840 crore in the preceding quarter.
At the end of September, Vodafone Idea’s gross debt (excluding lease liabilities and including interest accrued but not due) rose to Rs 2.13 trillion. The gross debt comprises deferred spectrum payment obligations of Rs 1.35 trillion, AGR liabilities of Rs 68,180 crore that are due to the government, debt from banks and financial institutions of Rs 7,860 crore and optionally convertible debentures amounting to Rs 1,660 crore.
Source: The Financial Express