Vodafone Idea shares gain amid talks of SEBI nod to govt proposal to turn dues into equity

Vodafone Idea Ltd (NSE: IDEA) stock surged on Friday, October 21, amid talks that the Telecom Ministry will 'activate' its plan to convert dues of the debt-ridden company into equity as soon as the telco demonstrates firm commitment as a serious long-term player in the market through fundraising or any other confidence-building measure. The stock quoted Rs 8.85, up by more than 2 per cent on NSE and BSE. 

According to a PTI report, the nod from market regulator SEBI came in earlier this year for the dues-to-equity conversion, and the Telecom Department is ready to "take the plunge" once VIL takes some "positive action". Any confidence-building measure would act as an assurance for the Department of Telecom (DoT), given that the government will neither have board representation in Vodafone Idea nor does it plan to interfere with decision-making within the telco despite the conversion giving it nearly 33 per cent stake.

PTI sources said necessary clearances came in from SEBI and DIPAM, and that DoT too is fully committed to supporting cash-strapped Vodafone Idea with the proposal to convert dues of the ailing telco into equity, as per a decision of the Union Cabinet.

Meanwhile, the company's board will meet later today to consider a proposal to raise funds through issuance of convertible debentures, the company informed BSE.

"Vodafone Idea Ltd has informed the BSE that the meeting of the Board of Directors of the company is scheduled on October 21, to consider and approve a proposal for issuance of debenture securities convertible into equity shares on a preferential or private placement basis to a vendor, subject to regulatory and other statutory approvals as may be required, including shareholders' approval," the company said in a notice to the BSE.

Vodafone Idea has been trying to raise funds for a long time but has not succeeded. It may try and raise funds through issuance of convertible debentures through private placement to a vendor.

Vodafone Idea owes an estimated Rs 6,800 crore to mobile tower giant Indus Towers and also Rs 2,400 crore to ATC. Indus Towers is said to have asked Vodafone Idea to clear its outstanding dues and pay every month on time for continuity of business post-November 2022, according to a report in news agency IANS.