There’s been a lot of backtracking after Monday’s news that the low Vodafone Idea/Vi share price could delay plans for the Indian government to take equity in the operator.
Firstly Vi itself said that no guideline prohibited the government from taking equity simply because the company’s current share value was less than par value – 10 rupees or about 12 US cents in the case of Vi. Then Indus Towers (a Vi creditor) withdrew a key paragraph from its quarterly report for July-September that had said that such a guideline did exist, admitting that the suggestion was incorporated erroneously.
It had suggested that the Department of Telecommunications (DoT) could convert Vodafone Idea’s accrued interest on deferred adjusted gross revenue-related dues into equity only after its stock price stabilised above 10 rupees.
As we said on Monday, Vi can ill-afford any further delay to this process, given the dues it owes vendors and the need to keep investors happy.
India’s Economic Times points out that the equity conversion proposal has been pending since the start of the year and that the government had asked the company to present a concrete fundraising plan before it finalises the conversion. The question now is: when will the conversion go ahead?
Of course, Vi isn’t the only cash-strapped operator seeking to raise funds. According to local press reports, Indian state-run operators Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL) apparently intend to raise an aggregate of 193.56 billion Indian rupees (US$2.341 billion) before the end of this year through government guaranteed bonds.