New Delhi:
The government is expected to issue detailed guidelines for converting telecom players’ interest payment obligations into equity within a month, a senior official said on Thursday.
Under the telecom reform package announced last year, three debt-ridden telcos – Vodafone Idea Limited (VIL), Tata Teleservices Limited (TTSL) and Tata Teleservices (Maharashtra) Limited (TTML) – have proposed to reduce their respective interest obligations to the government in shares.
After conversion of the liabilities, the government is expected to have a 35.8 percent interest in VIL and approximately 9.5 percent each in TTML and TTSL.
“The details of the conversion of dues into equity should come from the Department of Finance. DIPAM (Department of Investment and Public Asset Management) will likely work on the details and then send it to the Department of Telecom (DoT). The process should not take more than a month,” said the senior government official.
VIL has estimated the interest charges payable to the government at about Rs 16,000 crore, TTSL at about Rs 4,139 crore and TTML at about Rs 850 crore.
On Wednesday, Telecoms Minister Ashwini Vaishnaw said that even after conversion of dues into equity, the obligation to pay past and future debts remains with the telecom companies.
“The government will only remain an investor. The companies will be led by professionals. All debts will remain the responsibility of the companies. The companies have made commitments to us,” Vaishnaw said on Wednesday.
VIL has proposed to grant preferred shares to the government at Rs 10 per share, which analysts say is a 58 percent premium based on the share price as of the relevant date of 14 August 2021.
On whether the payment for the upcoming spectrum auction will be with the government, Mr Vaishnaw said the companies will bear full responsibility for the payment for radio waves and there will be no burden on the government.
He had also said that the government has just lent a helping hand as part of the telecoms reform package to ease the burden on them, save and create jobs and ensure healthy competition in the sector.
“We will leave the companies at an appropriate time. The government will not interfere in the day-to-day operations of the company. They will be managed professionally,” Mr Vaishnaw had said.
The telecoms ministry also said on Wednesday that the three companies will not become state-owned companies even after the government gains a stake in them.