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NEW DELHI : Vodafone Idea has initiated talks with American Tower Corp. (ATC) to extend an agreement to sell optionally convertible debentures to the tower provider after the telecom operator’s shareholder approval for the sale lapsed.

The sale was contingent on the conversion by the government’s interest from deferment of adjusted gross revenue (AGR) and spectrum dues of 16,000 crore into equity shares, which has not taken place, Vodafone Idea told stock exchanges on Tuesday.

“One of the conditions precedent for the preferential issue was conversion by the government of India of interest from deferment of AGR and spectrum dues owed by the company into equity shares. As the company has not received any communication from the government of India on such conversion, the issuance of optionally convertible debentures to American Tower Corp. has not been completed within the validity period of the shareholders’ resolution (15 days from the date of passing of the resolution). Accordingly, the shareholders’ resolution has lapsed," Vodafone Idea said in a BSE filing.

“The company is in discussion with American Tower Corp. for extension of the agreement, and a fresh shareholders’ approval will be sought as required," it added.

Shares of Vodafone Idea declined 1.22% to close trading at 8.07 apiece.

Loss-making Vodafone Idea had earlier decided to sell 1,600 crore worth of convertible bonds to American Tower Corp., which will be used by the carrier to repay some of the pending dues to the tower operator for renting its assets to provide mobile phone services in India.

The telco’s plan included selling 16,000 optionally convertible, unsecured, unrated and unlisted debentures of 10 lakh each in one or more tranches. The bonds were to carry a coupon rate of 11.2% per annum, payable semi-annually during its term of 18 months and will be convertible into shares at a price of 10 per share.

It is unclear whether the terms and conditions of the bond issuance will remain constant when Vodafone Idea seeks an extension of the agreement and fresh shareholder approval.

Vodafone Idea currently owes more than 3,000 crore to ATC and an additional estimated 7,000 crore to Indus Towers, the world’s largest tower provider, according to people familiar with the matter.

The telecom operator sought easier payment terms, including additional time and partial payment of its outstanding dues, from Indus Towers, following reports of the tower provider considering revocation of services if its dues were not paid.

Vodafone Idea chief executive officer Akshaya Moondra said last month that the company had not heard from the government and added that he was not sure of the reasons for the delay from the government’s side on the equity conversion.

The carrier has been trying to raise 20,000 crore in debt and equity from external investors since 2020. The third-largest Indian wireless operator received an equity infusion of 4,500 crore from promoters Aditya Birla Group and Vodafone Group Plc earlier in the financial year.

Moondra had said that Vodafone Idea’s fundraising was also dependent on the conversion into equity, which was yet to happen.

ABOUT THE AUTHOR

Gulveen Aulakh

Gulveen Aulakh is Senior Assistant Editor at Mint, serving dual roles covering the disinvestment landscape out of New Delhi, and the telecom & IT sectors as part of the corporate bureau. She had been tracking several government ministries for the last ten years in her previous stint at The Economic Times. An IIM Calcutta alumnus, Gulveen is fluent in French, a keen learner of new languages and avid foodie.
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