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Friday, January 28, 2022

Vodafone Idea: After the decision of the company’s equity conversion, why the stock is falling, know the reason

Vodafone Idea After the decision of converting AGR liability into equity, the stock fell flat in today’s trading. Although this decision of the company will help in keeping Vodafone Idea afloat, it is not good news for the shareholders.

TCG AMC’s Chakri Lokapriya It is said that this decision of the company will see the dilution of the equity shares of the company. The government will acquire shares of the company at a price of Rs 10 per share, as against the stock that closed at Rs 14.85 on Monday.

This means that the valuation of the company will stabilize to a large extent. The government’s stake in the company will become stable. This will reduce the liquidity of the company’s shares. All this will have a negative effect on the shares of the company.

This stock with Vijay Kedia’s portfolio took upper circuit for the second consecutive day, what do you have?

There itself edelweiss It is said that because this equity conversion only means that the company will get relief from payment of dues for 4 years but after 4 years the overall liability of the company will remain the same. In other words, this decision of the company will not result in any major reduction in its liability to pay dues, but due to the government’s penetration in the company, the company’s chances of survival increase somewhat.

The market will keep an eye on the company’s board structure and changes in its management going forward. The company’s position in the long run will depend on how much its ARPU (Average Earnings Per Consumer) grows.

In today’s trading, Vodafone Idea shares broke up to 20 percent in intraday. Vodafone Idea has informed on Tuesday that in its board meeting held on Monday, it has been decided to convert the entire interest amount of the company’s outstanding spectrum auction installments and outstanding AGR into equity. As a result of this conversion, the stake of all the existing shareholders of the company including the promoter will be diluted. The Net Present Value (NPV) of this interest is estimated to be around Rs 16,000 crore. This estimate is subject to confirmation by the Department of Telecommunications.

This means that the company will issue shares to the government at the rate of Rs 10 per share in lieu of interest. The interest of the moratorium will be around Rs 16,000 crore. The government had given companies the option of moratorium instead of equity. Under this, the company will give more than 35 percent equity to the government. The promoters’ shareholding in the company will come down to 46.3 per cent. The government will appoint its own board of directors in the company. At the same time, Aditya Birla Group will have 17.8 percent stake left.


Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.
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