Vodafone Idea in talks with ATC for extending OCD issuance of Rs1,600 crore

The issuance was contingent on the conversion by the government of interest from deferment of adjusted gross revenue and spectrum dues of ₹16,000 crore owed by the company into equity shares, which has not taken place, the No 2 carrier told exchanges on Tuesday.  

“One of the conditions precedent for the preferential issue was conversion by the Government of India of interest from deferment of AGR and spectrum dues owed by the company into equity shares. As the company has not received any communication from the Government of India on such conversion, the issuance of OCDs to ATC has not been completed, within the validity period of the shareholders’ resolution (15 days from the date of passing of the resolution). Accordingly the shareholders’ resolution has lapsed,” Vodafone Idea said in the intimation to BSE on Tuesday. 

“The company is in discussion with ATC for extension of the agreement and a fresh shareholders’ approval will be sought as required,” it added. Shares of Vodafone Idea closed at ₹8.07, down 1.22% on Tuesday.  

The loss-making carrier had decided to sell ₹1,600 crore worth of convertible bonds to ATC Telecom Infrastructure, which will be used by the carrier to pay back some of the pending dues to the tower operator for renting its assets to provide mobile phone services in India.  

The telco’s plan included selling16,000 optionally convertible, unsecured, unrated and unlisted debentures of ₹10 lakh each in one or more tranches. The bonds were to carry a coupon rate of 11.2% per annum, payable semi-annually during its term of 18 months, and will be convertible into shares at a price of ₹10 per share.  

It is unclear whether the terms and conditions of the bond issuance will remain constant when Vodafone Idea seeks extension of the agreement and a fresh shareholder approval.  

At present, Vodafone Idea owes more than ₹3,000 crore to ATC and an additional estimated ₹7,000 crore to Indus Towers, the world’s largest tower provider, according to people familiar with the development.  

Vodafone Idea sought softer payment terms, including additional time and partial payment of its outstanding dues, from Indus Towers, following reports of the tower provider considering revocation of services if its dues were not paid.   

Vodafone Idea chief executive officer Akshaya Moondra said last month that the company had not heard from the government, and added that he was not sure of the reasons of the delay from the government’s side on the equity conversion. 

The loss-making carrier has been trying to raise ₹20,000 crore in debt and equity from external investors since 2020. The No 3 carrier received equity infusion of ₹4,500 crore from promoters Aditya Birla Group and Vodafone Group Plc earlier in the financial year.  

Moondra had said that that Vodafone Idea’s fund raise was also dependent on the conversion into equity which was yet to happen.