With this, the government will own 33% of the financially precarious telecom joint venture between UK’s Vodafone and Kumar Mangalam Birla’s Aditya Birla Group, making it the largest shareholder. It has been over 13 months after the Vi board approved the interest conversion. The government recently added a requirement that promoters of Vi must inject money into the telco before any equity conversion can take place, even though the Union Cabinet had approved a telecom package in October 2021 that included conversion of dues into equity.
While the government’s choice to choose stock conversion over interest payments due from Vi eliminates an overhang, analysts predict that the business will need a large infusion of funds from promoters and investors to pay off short-term obligations and maintain investments.
Video Courtesy: The Economic Times
This choice was eagerly anticipated. The company has neglected to pay its vendors and has lagged on network spending, so how quickly it obtains money will be crucial. Until we see a significant money raising or strategic investment, we do not anticipate any significant relief In a note, ICICI Securities stated.
On prospects of receiving payment from Vi, shares of Indus Towers also increased 15% to Rs 164.80. On January 27, 2023, the stock reached a low of more than two years, or Rs 135.20. The company reported a net loss of Rs 708 crore for the October-December quarter (Q3FY23), primarily because of a provision for doubtful debt of Rs 2,201 crore and an unusual charge of Rs 493 crore. In the September quarter, the business achieved a net profit of Rs. 872 crore (Q2FY23).
The company’s revenues for Q3FY23 were Rs 6,765 crore, down 5% year over year and 12.7% quarter over quarter. Earnings before interest, taxes, depreciation, and amortisation (ebitda) were reported at Rs 1,163 crore, down 68.6% year over year, with Ebitda margins at 17.2%. The business supplied against doubtful debts of Rs 2,270 crore against dues from Vi. Indus Towers is India’s top provider of passive telecom infrastructure and it deploys, owns, and administers telecom towers and communication structures for different mobile operators.
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