ATC chooses to convert Rs. 1,440 crore that is owed into fully paid-up VIL shares

The telecom infrastructure provider American Tower Corporation (ATC) has chosen to convert its outstanding debt of Rs 1,440 crore to Vodafone Idea (VIL) into fully paid-up equity shares of VIL. As a result, ATC would own around 2.95% of Vodafone Idea, the third-biggest telecom company in the nation.

Currently, Vodafone Plc. and Aditya Birla Group, the business’s sponsors, control 28.5% and 17.5% of the company, respectively, with the Government of India holding 35.8% of the shares.

“ATC would convert 144 crore fully paid-up equity shares of VIL into optionally convertible debentures (OCDs) issued by VIL in an amount of Rs 1,440 crore. According to the provisions of the OCDs, Vodafone Idea stated in a statement, “VIL will take the necessary steps to allot the equity shares to ATC pursuant to the conversion of the said OCDs.”

ATC is one of VIL’s biggest infrastructure service suppliers, and the two companies have a well-established working partnership. Due to financial difficulties, the telecom was unable to pay ATC’s debt, thus in February 2023 it issued OCDs to ATC in the amount of Rs 1,600 crore. Vodafone Idea gave ATC’s OCDs a one-year redemption time extension in August. When OCDs were issued, the conversion price of Rs 10 was more than the going rate for VIL shares in the market.

“In keeping with the spirit of this collaboration, ATC subscribed to OCDs totaling Rs. 16 billion, with the proceeds mostly being used to settle ATC debt. The business said that the conversion price of Rs. 10 at the time of OCD issue was higher than the market price of VIL shares at the time.

For almost three years, Vodafone Idea, a joint venture between Aditya Birla Group of India and Vodafone Plc of the UK, has been experiencing financial difficulties in raising capital. The company’s inability to stop losing customers to rivals Reliance Jio and Bharti Airtel and provide 5G services throughout the nation is a result of a lack of funding.