Sebi clears govt proposal to turn Vodafone Idea dues into equity

NEW DELHI: Market regulator Sebi approved the government’s proposal to convert dues of over $1.92 billion by telecom operator Vodafone Idea to equity, two senior government officials said on Thursday.

Last year, the Centre had approved a rescue package for debt-strapped telecom firms that allowed them to convert interest on deferred adjusted gross revenue owed to the government into equity.

Among the country’s three major telecom players, including Bharti Airtel and Reliance Industries’ Jio, the government package was seen as a bailout for Vodafone Idea, which was on the verge of bankruptcy.

“SEBI (Securities and Exchange Board of India) has approved the government’s proposal to come in as a financial investor. This has been communicated to the telecom ministry,” said one of the officials, who did not want to be named.

The government’s stake in Vodafone after the conversion could be more than 30%, the official added, which would make it one of the largest shareholders in the company along with UK’s Vodafone Group and Aditya Birla Group.

SEBI has also approved the government’s request to classify its shareholding in Vodafone Idea as public float, both the officials said. The market regulator’s guidelines state that only stakes up to 10% can be classified as public shareholding.

The finance and telecom ministries, SEBI and Vodafone Idea did not immediately reply to request for comments. The government will sell its stake in the telecom operator once it is turned around, one of the officials said.

Meanwhile, the debt-ridden Vodafone Idea’s board are slated to meet today to finalise plans for raising funds.

Vodafone Idea has informed Bombay Stock Exchange (BSE) that its board will meet on October 21 to consider a proposal to raise funds through issuance of convertible debentures.

“Vodafone Idea Ltd has informed the BSE that the meeting of the Board of Directors of the company is scheduled on October 21, to consider and approve a proposal for issuance of debenture securities convertible into equity shares on a preferential or private placement basis to a vendor, subject to regulatory and other statutory approvals as may be required, including shareholders’ approval,” it said in a BSE notice.

Vodafone Idea has been trying to raise funds for a long time but has not succeeded.. Vodafone Idea owes an estimated Rs 6,800 crore to mobile tower giant Indus Towers and also Rs 2,400 crore to ATC.