Tata Teleservices To Convert Interest On AGR Dues Into Equity, Government To Own 9.5%

Tata Teleservices (Maharashtra) Ltd. joins larger peer Vodafone India Ltd. to seek conversion of the interest on adjusted gross revenue dues into equity, giving the government more than 9% stake in the carrier.

The equity shares will be issued to the government at Rs 41.5 apiece, subject to final confirmation by the Department of Telecommunications, Tata Teleservices said in an exchange filing.

“The conversion will result in dilution to all the existing shareholders of the company, including the promoters,” the filing said. After the conversion, the government will hold 9.5% of the total outstanding shares of the carrier.

As of September, promoters held a 74.36% stake in the company, while the public owned 25.64%.

Tata Teleservices decision followed hours after Vodafone Idea Ltd. approved the similar conversion. Last year, India approved a relief package that included a freeze on the repayment of statutory dues and spectrum payments for four years. The government allowed telecom operators to avail of a one-time opportunity to convert the net present value of the interest that will accrue on the deferred payments into equity.

In October, the Tata Teleservices board had decided to opt for it.

Tata Teleservices estimated the NPV of the interest that would accrue on installment payment during the moratorium to be about Rs 850 crore, subject to confirmation by the DoT.

Shares of Tata Teleservices closed nearly 5% higher on Tuesday compared with a 0.29% gain in the Nifty 50.

Last week, Bharti Airtel Ltd. said it would not avail the option of conversion of the interest on the deferred spectrum and AGR dues into equity.