Vodafone Idea (Vi) is probably not going to choose transformation of interest on government levy into value, business IIFL said in a note today. The telecom organization needs to accept an approach the issue by Wednesday. Last Friday, Bharti Airtel reported that it will pay the interest on conceded range and changed gross income liabilities and won’t give value to the government. The organization educated the department of telecommunications that it won’t profit the choice of transformation of the interest on conceded range and AGR duty into value, it said in a stock trade notice on Friday.
The government last October announced a slew of measures to protect the financial health of telecom companies. This includes a four year moratorium on the spectrum and AGR dues. Further the companies also have an option to convert the interest amount arising due to the said deferment into equity.
“Our calculation suggests that if Vi were to exercise this option, there would be ~52 per cent dilution and the government could end up owning 34 per cent stake. With the recent ~20% tariff hikes and Vi having likely tied up the funding for repaying the non-convertible debentures maturing between December 2021 and February 2022, its prospects have improved. In our view, Vi is likely to continue its fund-raising efforts from its promoters and other investors rather than letting the government acquire a significant stake, “ IIFL said.
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