Govt clarifies telcos opting for equity conversion won't become PSUs
2 min read 13 Jan 2022, 02:30 PM ISTVodafone Idea, Tata Teleservices Maharashtra, and Tata Teleservices have chosen to convert interest on dues over a four-year moratorium period to equity upfront in a one-time option provided by the government as part of the structural reforms announced in September last year
PremiumNEW DELHI: Vodafone Idea, Tata Teleservices Maharashtra Ltd (TTML) and Tata Teleservices Ltd (TTSL) will not become public sector enterprises and will be run as professionally managed, privately run telecom companies, the government has said.
In a set of frequently asked questions issued by the department of telecommunications, the government has clarified that it will sell the shares it will hold in the companies post conversion, at an appropriate time to realise the due amounts.
"These three companies will not become PSUs. These three companies will continue to be managed as professionally run private companies," the government said.
The three telcos have chosen to convert interest on dues over a four-year moratorium period to equity upfront in a one-time option provided by the government as part of the structural reforms announced in September last year.
Earlier this week, Vodafone Idea opted to convert interest on deferment of adjusted gross revenue (AGR) and spectrum instalments dues of about ₹16,000 crore into equity. After the conversion, the government will own 35.8% of Vodafone Idea, while Vodafone Group’s stake will drop to 28.5% from 44.39%, and Aditya Birla Group’s ownership will be diluted to 17.8% from 27.66%.
TTML also opted for converting the interest from AGR dues amounting to ₹850 crore into equity, which will lead to the government holding 9.5% in the company.
On 12 January, the last date for opting for the scheme, Tata Teleservices Ltd (TTSL) wrote to DoT asking for converting interest on AGR dues of about ₹4,139 crore to equity. The equity holding in the unlisted entity will be based on the net present value (NPV), which will be decided based on mutual agreement.
The conversion and final shareholding will take place after discussions between the companies and the government.
"Government can sell these shares at appropriate time and thereby receive the amounts due," the statement said, but did not specify the methods of sales that the government may adopt.
"With conversion of liabilities into equity/preference shares, the sector has got back the ability to invest and provide better services," it added, noting that companies will also retain the ability to invest so that telecom services can reach far-flung areas.
The government has highlighted that the telecom industry needs to stay healthy and competitive, and because of the government’s reforms and support in times of such pandemic means that companies will be able to sustain their business.
"It will also stop a scenario where there are very few players in the market," it said. Potential lack of competition could lead to higher prices and poor services, it said, adding that enough competition in the market would safeguard the interests of the common man.
