According to industry sources, a UK-India trade body has sought the help of the Indian High Commissioner in the United Kingdom (UK) in speeding up government’s conversion of Vodafone Idea Limited’s (Vi’s) accrued interest on the deferred adjusted gross revenue (AGR) dues into equity.
Vikram K Doraiswami, the high commissioner, on his part, has written to the finance ministry, seeking guidance on proceeding the matter, noting that the issue may gather momentum in the coming months. In a recent letter to Doraiswami, the UK India Business Council has said that conversion delay by India’s Department of Telecommunications (DoT), despite a written clearance by the finance ministry and support of the Prime Minister’s Office (PMO), has hurt Vi’s operations as it is not able to raise funds.
Also, despite written approval from the ministry of finance and support from the PMO, DoT has held back converting interest to equity as per the cabinet’s decision. Meanwhile, the decision makers in DoT are verbally telling the company and its promoters that they want pre-conditions to the equity conversion, such as an additional equity commitment, which was never previously in the Cabinet decision.
However, as per sources, the unwillingness on the part of Vi’s promoters, Vodafone Plc of UK and the Aditya Birla Group, to infuse adequate capital into the telco makes it unviable for the government to convert the interest into equity. This stance has stymied the telco’s efforts to raise equity funding as the external investors want the government to first take stake. Banks have also pushed the telco’s promoters to put in more funds before lending more to Vi.
