Tata Teleservices (Maharashtra) Ltd, a Tata Group company, on January 11 approved the conversion of interest payable on its deferred adjusted gross revenue (AGR) dues into equity, following a similar step taken by Vodafone Idea earlier in the day.
“It is expected that the government will hold approximately 9.5 percent of the total outstanding shares of the company” following the conversion, TTML said in a stock exchange filing after the markets closed.
The net present value of the interest is expected to be about Rs 850 crore and is subject to confirmation by the Department of Telecommunications. The conversion of the interest amount to equity will imply dilution of all existing shareholders, including the promoters, the company said.
The promoter and promoter group held 74.36 percent of TTML’s equity as of September-end, while the public held 25.64 percent, as per data on the BSE website.
“The average price of the company’s shares at the relevant date of August 14, 2021, as per the calculation method provided in the DoT communication, works out to be ~Rs. 41.50 per share, subject to final confirmation by the DoT,” TTML said.
TTML shares climbed 5 percent to a 52-week high of Rs 291.05 on the BSE at the close on January 11. The shares have surged from Rs 2.82 on October 16, 2020.
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Earlier in the day, Vodafone Idea approved the conversion of interest related to its spectrum auction instalments and AGR dues with an NAV of about Rs 16,000 crore into equity. Following this conversion, the government will hold a 35.8 percent stake in the cash-strapped telecom service provider and the promoter holdings would decline to 28.5 percent for the Vodafone Group and 17.8 percent for the Aditya Birla Group.
The DoT had provided various options for telecom service providers to clear their dues on October 14. They included the deferment of spectrum auction payment dues and AGR-related dues for up to four years. The DoT also said telcos could convert the interest due on deferred spectrum and AGR dues into equity.
The TTML board approved the deferment of its AGR dues on October 26.
With a market capitalisation of Rs 56,898 crore, TTML has become the sixth most valued company in the Tata Group, beating Tata Communications, Voltas, Trent, Tata Elxsi, Indian Hotels and Tata Chemicals, which have much higher revenue.
According to data from ACE Equities, TTML has reported a profit in only two of the 82 quarters since 2001 – in March 2019 and June 2010. The company had total debt of Rs 19,429.22 crore at the end of FY21.