Authorities is now the biggest shareholder in Vodafone Concept

  • India’s third largest telecom firm has transformed its dues to the federal government right into a stake within the firm.
  • Because of this announcement, the stake of the promoters, Vodafone Plc, and Aditya Birla Group will come all the way down to 46% from the sooner 72%.
  • The federal government will now maintain a 35.8% stake within the firm, price ₹16,000 crore, making it the biggest shareholder.
  • Vodafone Concept had earlier opted for a moratorium of 4 years on spectrum and AGR dues.

Vodafone Concept on Tuesday introduced that it’ll settle for the Indian authorities’s proposal to transform its spectrum and adjusted gross income (AGR) dues into fairness, making the federal government the corporate’s largest shareholder. And, the implicit price of this conversion is ₹10 per share, which is a reduction of 32% on the closing worth of Monday (January 10).

With this, the Authorities of India will now have 35.8% stake within the firm. The promoters – Vodafone Plc., and Aditya Birla Group – will maintain 28.5% and 17.5% stake, respectively. That is down from the present shareholding of 44.39% and 27.66%, respectively.

The explanation for allotting the shares to the federal government at ₹10 is as a result of the typical share worth as on date (August 14, 2021) was beneath par (₹10), the corporate famous in its submitting.

Vodafone Concept share worth since announcement of telecom reduction package dealBSE / Enterprise Insider India / Florish

“The shares could also be held on behalf of the Authorities of India by a statutory endeavor of the Unit Belief of India (SUUTI) or by any trustee-type or different applicable association,” the corporate stated in its assertion to the exchanges. SUUTI is a authorities funding arm that holds vital stake in publicly listed corporations resembling HDFC Financial institution, ICICI Financial institution, State Financial institution of India.

Government is now the largest shareholder in Vodafone Idea
Vodafone Concept’s new shareholding sampleVodafone Concept / Enterprise Insider India / Flourish

In line with an trade submitting by the corporate, the web current worth of curiosity owed by Vodafone Concept to the federal government presently stands at ₹16,000 crore.
The DoT in October 2021 introduced Vodafone Concept and Airtel with numerous choices to get from the telecom reduction package deal introduced in September.

This included deferment of spectrum and AGR dues for 4 years and conversion of curiosity on the stated quantity into fairness shares.

Vodafone Concept later adopted within the footsteps and opted for a moratorium with its rival Airtel.

What’s AGR?

In 1999, the federal government and telecom operators shifted to a revenue-sharing payment mannequin, which required them to share part of their adjusted gross income (AGR) with the federal government within the type of annual license payment and spectrum utilization expenses.

AGR is outlined within the license agreements entered into between the Division of Telecommunications (DoT) and telecom operators.

In a notification issued in October, DoT redefined the idea of AGR, eradicating all non-telecom income from its purview. It’ll then be used to calculate the license and spectrum utilization expenses (SUC) that the telecom corporations should pay to the federal government.

Right here is how a lot Vodafone Concept and Airtel owe the federal government as AGR dues:

firm Complete AGR Demand (in Crore) AGR dues paid (in crore) Excellent AGR Dues (in Crore)
Vodafone Concept ₹58,254 ₹7,854 ₹ 50,339
Airtel ₹43,980 ₹18,004 ₹25,976

Supply: AGR dues case in Supreme Court docket

See all:

Govt taking stake in Vodafone Concept ‘could possibly be a treatment worse than illness’, specialists say

Airtel, Vodafone Concept and Jio Telecom welcome reduction package deal, however analysts are divided on whether or not it’s sufficient

Vodafone Concept, Paytm, Fortis Healthcare, Delta Corp and different sizzling shares on Jan 11

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