New Delhi: The government has discussed the option to convert part of the cellular company’s interest contribution to an equity instrument as part of a larger solution to sort out the telecommunications financial chaos, which is likely to be taken immediately by the Union cabinet considering the Finance of Vodafone’s stressful ideas.
The proposal that is being discussed includes extending the spectrum payment moratorium for the company in several years, and after it converts interest sections – to be charged to maintain the current value (NPV) – into equity, while the company is mandated.
To pay back the principal as a whole, said the source.
Fresh breaks in payment for spectrum purchases, more than and above the two-year vacation, which ends at the end of this fiscal, will be relieved for this sector, especially for the idea of Vodafone, which faces a severe cash crisis of the company’s debt which lasts up to RS 1, 7 lakh crore.
The government believes that the survival of vodafone ideas is important not only to maintain adequate competition in the telecommunications industry and avoid duopoly (with the dependence of Jio and Airtel as the only private operator), but also remember to save its own interests as a large part.
The extraordinary company is in the direction of Extequer, which will be a suspect if he slips into bankruptcy.
To change the interest in equity, the preferential bony guidelines will be followed when it comes to companies listed such as Vodafone and Bharti Airtel ideas.
Sources say that detailed modalities of equity conversion are “the possibility of complex with some operational problems” which will be carried out together by the Ministry of Finance, the Department of Telecommunications, Sebi, regardless of other related participants.
Sources added that the proposal also stated that the government, for its own policy, could also decide to step a step route conversion of equity and prefer to select stock preferences that can be redeemed (which may or cannot be converted), completely or partially.
In the past, the government had moved away from such transactions and still had to be seen if the proposal was finally taken.
In a letter to the Cabinet Secretary of Rajiv Gauba on June 7, Industrialist Kumar Mangalam Birla (whose group holds 27% of the shares in the idea of Vodafone) offer ownership to the government or other entities that are considered to ensure the survival.
Government option? Part of telco interest contributions as equity
