As per industry sources, the government is expected to formulate detailed guidelines for conversion of interest payment liabilities of telecom players into equity within a month.
As of now, under the telecom reforms package, Vodafone Idea (Vi), Tata Teleservices Limited (TTSL) and Tata Teleservices (Maharashtra) Limited (TTML), have proposed to convert their respective interest liabilities payable to the government into equity. Having opted for conversion of interest liabilities into government equity, the government is projected to have a 35.8 per cent stake in Vi and around 9.5 per cent shareholding each in TTML and TTSL.
The Department of Investment and Public Asset Management (DIPAM) is likely to work on the details of conversion of interest dues into government equity and thereafter send the recommendations to the Department of Telecommunications (DoT). This process is expected to be completed within a month.
As per estimates, the interest liabilities of Vi stood at around Rs 160 billion, TTSL at about Rs 41.39 billion and TTML at around Rs 8.50 billion. In addition, lately, the government has announced that even after conversion of dues into equity, the liability to pay past and future debt will remain with the telecom companies. Government will only remain an investor. The companies will, as usual, be run by professionals.
Vi has reportedly proposed to allocate preferential shares to the government at Rs 10 per share, which according to analysts is at 58 per cent premium based on the share price at the relevant date of August 14, 2021. Meanwhile, on the liability front, the companies will have the entire responsibility for the payment for radio-waves and the government will assume no burden. The government will exit from the companies at an appropriate time. The government will not interfere in day to day operations of the company.