Winning Bizness Desk
Mumbai. Market regulator SEBI has approved the government's proposal to convert its $1.92 billion debt into equity, giving a big relief to telecom operator Vodafone-Idea. Two officials privy to the development have given this information. Notably, only last year, India had approved a relief package for debt-ridden telecom companies. In this, companies were allowed to convert the interest made up of the government's outstanding adjusted gross revenue into equity. This package brought a big relief for Vodafone-Idea, one of the three major telecom companies in the country, including Bharti Airtel and Reliance Industries' Jio, as it was on the verge of bankruptcy. An official on the condition of anonymity said that SEBI has approved the government's proposal to come as a financial investor. The Ministry of Telecom has been informed about this. The official said that after the conversion, the government's stake in Vodafone could exceed 30%. With this, the government will join Vodafone Group and Aditya Birla Group as the largest shareholders of the company.
10% can be classified as public shareholding
Officials said Sebi has also accepted the government's request to classify its stake in Vodafone Idea as a public float. SEBI guidelines state that only holding up to 10% can be classified as public shareholding. At the same time, the Ministry of Finance, Ministry of Telecom, SEBI and Vodafone Idea have not commented on this development. An official said that the government will sell its stake in the telecom operator.
The government had announced the telecom relief package in October 2021. Vodafone Idea had opted not to pay spectrum charges and AGR dues for 4 years. During the moratorium of these four years, the telecom companies will have to pay the interest. Later, DoT gave another 90 days to the telecom companies. Also said that if they want to convert this interest into equity, then they can take a decision. Vodafone Idea had decided to convert this amount into equity.