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Sunday, January 23, 2022

Telecom companies adopting equity conversion will not become PSU, the government clarified

Department of Telecommunications : Vodafone Idea, Tata Teleservices Maharashtra Ltd. (TTML) Tata Tele Services Ltd. Public sector enterprises will no longer be formed and telecommunications companies will continue to be run as a professionally managed, private company. The government has given this clarification on Thursday to allay the apprehensions related to their becoming the government.

Government clarified in frequently asked questions

In a set of frequently asked questions issued by the Department of Telecommunications, the government made it clear that it will sell the shares of the companies acquired after conversion at an appropriate time to recover the dues.

The government said, “These three companies will not become PSUs. They will continue to operate like private companies. The three companies had opted to convert interest on dues into equity with a four-year moratorium offer in a one-time option provided by the government as part of the structural reforms announced by the government in September last year.

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Government will have 35.8% stake in Voda Idea

Earlier this week, Vodafone Idea opted to convert about Rs 16,000 crore of interest on adjusted gross revenue (AGR) and spectrum installations dues into equity. Post-conversion, the government will hold 35.8 per cent stake in Vodafone Idea, while Vodafone Group’s stake will come down to 28.5 per cent from 44.39 per cent and Aditya Birla Group’s stake will come down from 27.66 per cent to 17.8 per cent.

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Government’s stake in TTML and TTSL as well

TTML had also opted to convert an amount of Rs 850 crore into equity as interest on AGR dues, taking the government’s stake in the company to 9.5 per cent.

On the last date of the scheme, Tata Teleservices Ltd. (TTSL) has written to DoT asking to convert the interest of Rs 4,139 crore on AGR dues into equity. The conversion and the final shareholding will be decided after consultations between the companies and the government.

Government will sell stake at an appropriate time

“The government may sell these shares at an appropriate time and recover the outstanding amount,” the government said in a statement. However, it did not mention the method of sale, which the government can adopt.

“Conversion of liabilities into equity/preference shares will enable the sector to invest and provide better services,” it said.

The government said the telecom industry needs to remain strong and competitive. During the pandemic, government reforms and support means companies will be able to continue their business.

Competition will remain in the market

“This will also put a stop to the scenario where only a few companies are in the market,” the government said. According to the government, a possible drop in competition could lead to high prices and poor services. Adequate competition will protect the interests of the common man.


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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