Government specifies that telecom operators opting for conversion into shares will not become PSUs
NEW DELHI: Vodafone Idea, Tata Teleservices Maharashtra Ltd (TTML) and Tata Teleservices Ltd (TTSL) will not become public sector companies and will be run as private telecommunications companies run by professionals, the government said.
In a series of frequently asked questions issued by the telecommunications ministry, the government has made it clear that it will sell the shares it will hold in the companies after the conversion, at an appropriate time to realize the amounts owed.
“These three companies will not become PSUs. These three companies will continue to be managed as private companies managed by professionals,” the government said.
The three telecom operators elected to convert interest on contributions over a four-year moratorium period into up-front equity as part of a single option provided by the government as part of structural reforms announced in September. Last year.
Earlier this week, Vodafone Idea elected to convert deferral interest on Adjusted Gross Income (AGR) and spectrum payouts from around ??16,000 crore in equity. After the conversion, the government will own 35.8% of Vodafone Idea, while the stake of Vodafone Group will increase from 44.39% to 28.5% and the stake of Aditya Birla Group will be diluted to 17.8% against 27 , 66%.
TTML has also opted for the conversion of interest on AGR contributions amounting to ??850 crore in equity, which will lead the government to own 9.5% in the company.
On January 12, the deadline to opt for the program, Tata Teleservices Ltd (TTSL) wrote to DoT asking them to convert interest on AGR contributions of approximately ??4,139 crore in equity. The participation in the capital of the unlisted entity will be based on the net present value (NPV), which will be decided by mutual agreement.
The conversion and the definitive shareholding will take place after discussions between the companies and the government.
“The government can sell these shares at the appropriate time and thus receive the amounts due,” the statement said, but did not specify the methods of sale that the government can adopt.
“With the conversion of liabilities into shares / preferred shares, the sector has regained the ability to invest and provide better services,” he added, noting that companies will also retain the ability to invest so that telecommunications services can reach remote areas.
The government stressed that the telecommunications industry must remain healthy and competitive, and due to reforms and government support during a pandemic, this means that companies will be able to maintain their operations.
“It will also stop a scenario where there are very few players in the market,” he said. The potential lack of competition could lead to higher prices and poor services, he said, adding that sufficient competition in the market would protect common man’s interests.
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