Tata Teleservices to transform curiosity quantity on AGR dues into fairness; govt holding seen at 9.5%

After Vodafone Idea, Tata Teleservices (Maharashtra) on Tuesday mentioned it’ll go for conversion of the curiosity quantity on AGR dues into fairness and put up conversion, the federal government’s holding within the firm is predicted to be round 9.5 per cent.
The announcement of Tata Teleservices (Maharashtra) got here inside hours of Voda Idea additionally deciding to go for changing the curiosity quantity on AGR dues into authorities fairness.
In a submitting to the BSE, Tata Teleservices (Maharashtra) mentioned Net Present Value or NPV of curiosity is predicted to be practically Rs 850 crore as per the corporate’s estimates, topic to affirmation by the Department of Telecom (DoT).
“… pursuant to the Empowered Committee of the Board of Directors, at its meeting held on January 11, 2022, the company is expressing its desire for the conversion of the full amount of such interest related to AGR dues into equity subject to mutual agreement on the terms and conditions,” the submitting mentioned.
The situations embody these associated to the governance of the corporate put up conversion of the curiosity quantity into fairness shares and varied regulatory/authorized provisions, it added.
The firm will talk the choice to the DoT. “Following conversion, it is expected that the government will hold approximately 9.5 per cent of the total outstanding shares of the company,” it mentioned.
The common worth of the corporate’s shares on the related date of August 14, 2021 as per the calculation technique supplied within the DoT communication works out to be about Rs 41.50 per share, topic to remaining affirmation by the DoT, as per the submitting.
According to the submitting, in case of conversion, it’ll lead to dilution of stakes of all the present shareholders of the corporate, together with the promoters.
Earlier, DoT had given telcos’ a time interval of 90 days to train the choice of changing the curiosity that might accrue on installment fee through the moratorium interval into fairness.
As on September 2021, promoters and promoter group held about 74.36 per cent stake within the firm whereas public shareholding was pegged at 25.64 per cent, as per knowledge availabe on BSE web site.
On Tuesday, Tata Teleservices (Maharashtra) shares closed at Rs 291.05 apiece on BSE, 5 per cent increased than the earlier shut.
The firm’s Adjusted Gross Revenue (AGR) dues stood at Rs 16,798 crore, of which the corporate has already made fee to the tune of Rs 4,197 crore.
On October 29, 2021, the corporate had said that it’ll avail the choice for deferment of AGR-related dues by a interval of 4 years with quick impact.
Vodafone Idea Ltd (VIL) too has determined to go for changing about Rs 16,000 crore curiosity dues legal responsibility payable to the federal government into fairness which is able to quantity to round 35.8 per cent stake within the firm.
If the plan goes by, the federal government will develop into the most important shareholder within the firm which is reeling below a debt burden of about Rs 1.95 lakh crore.
Last week, telecom operator Bharti Airtel made it clear that it’ll not avail the choice of conversion of the curiosity on deferred spectrum and AGR dues to fairness supplied below the reforms bundle.
The telecom sector had bought a shot within the arm with the federal government final yr approving a blockbuster reduction bundle that included a four-year break for corporations from paying statutory dues, permission to share scarce airwaves, change within the definition of income on which levies are paid and 100 per cent overseas funding by the automated route.
The authorities had additionally given telcos the choice to transform the curiosity quantity pertaining to the moratorium interval into fairness.
In a word on VIL on Tuesday, CLSA mentioned that even after reduction, the corporate will possible “struggle” to fund annual spectrum funds past a further four-year moratorium except ARPU (Average Revenue Per User) reaches Rs 250-300.
“At the end of the four-year moratorium, there will also be an option to convert principal dues into equity, at the discretion of the government,” it noticed.
Credit Suisse, in a report, mentioned its calculations present that VIL’s money movement state of affairs would “remain stretched” even after four-year moratorium with the corporate needing frequent fairness injections within the absence of sustained operational enchancment.