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Rishika Aradhya, Pune

Vodafone Idea shareholders agreed to the Rs 1600-crore preferential issuance of optionally convertible debentures to American Tower Corporation (ATC) on Saturday,. This move will allow the financially disadvantaged telco to settle most of the US tower company’s dues.

A Statement from Vodafone to the Bombay Stock Exchange said that 

“An Extraordinary General Meeting (“EGM”) of the Company was held on Saturday, 25th February, 2023 at 4:00 p.m. (IST) through Video Conference / Other Audio-Visual…,” 

The telco further stated that 99.99% majority of its shareholders had voted to approve the issuance of OCDs to ATC. 

With issuance of OCDs to ATC, the promoters now own 48.76% – 31.27% of UK’s Vodafone Group PLc, and 17.49% of India’s Aditya Birla Group – in Vodafone Idea. The government holds 32.09%.

The telco stated in its disclosure to the exchange that ATC will now own 3.18% in the cash-strapped telco, assuming full conversion of the OCDs issued.

Unprofitable Vi’s board had first approved the advantageous issue of OCDs to ATC Telecom Infrastructure at its extraordinary general meeting on November 21.

But the unprofitable carrier was forced to delay the issuance twice. The government didn’t convert telco’s Rs 16,130-crore accrued interest on deferred adjusted gross revenue (AGR)-related dues into equity, in the needed time frame.

On February 3, the government cleared the equity conversion, which gave it a 33.1% stake in telco, making it the single largest shareholder. This holding has been diluted after the issue to ATC.

It has been said by the analysts that the transaction is a small respite for the cash strapped telco, which has been finding it difficult to pay off its debts taken from other vendors such as Finish equipment maker Nokia (around Rs 3000 crore) and tower firm Indus Towers (around Rs7000 crore). 

The telco anticipates a part of its bank debt to be refinanced now that the government equity conversion is complete, freeing up money for critical network developments. According to the corporation, this should cause some cash flow from operations, which will be utilized to begin paying off vendor debt. The promoters of Vi are also anticipated to inject roughly 5000 crore rupees of equity in the near future, which might be followed by equity funding from outside investors.

According to government sources, the telecom needs between Rs 40,000 and Rs 50,000 crore to be able to compete successfully with rivals Reliance Jio and Bharti Airtel and stop the exodus of subscribers at a rapid rate.

Vi owed Rs 14, 728.6 crore to suppliers such as Indus, ATC, and Nokia as of December 31, 2022, and another Rs 13,190 crore to banks and other financial institutions, totaling Rs 2.227 lakh crore in net debt. The remainder of its enormous debt is made up of deferred and unpaid AGR- related obligations to the government and spectrum fees. The cash balance was Rs. 160 crore.