TTML to convert interest on AGR dues into equity; Government will hold 9.5% of the total outstanding shares

Tata Teleservices (Maharashtra) (TTML) on Tuesday said that the company will opt for conversion of the full amount of the interest related to AGR dues into equity. Post-conversion, the government holding in the company is expected to be about 9.5 per cent.

The net present value (NPV) of this interest is expected to be Rs 850 crore as per the company's best estimates, subject to confirmation by the Department of Telecom.

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. In case of conversion, it will result in dilution of all the existing shareholders of the Company, including the Promoters.

Tata Teleservices (Maharashtra) in a regulatory filing said that the Empowered Committee of the Board of Directors, at its meeting held on January 11, 2022, the Company is expressing its desire for the conversion of the full amount of such interest related to AGR Dues into equity subject to a mutual agreement on the terms and conditions, including, the governance of the Company post-conversion of the interest amount into equity shares and various regulatory/legal provisions including Section 62(4) and Section 53 of the Companies Act."

Earlier on Tuesday, Vodafone Idea (VIL) had said it has decided to opt for converting about Rs 16,000 crore interest dues liability payable to the government into equity, which will amount to around 35.8 per cent stake in the company.

The Department of Telecommunications (DoT) had, vide its communication dated October 14, 2021 (DoT Communication), providing various options to the Company in connection with the Telecom Reforms Package. The options that were made available to the Company pursuant to the aforesaid DoT Communication, are as under:

(a) One-time opportunity to opt for deferment of AGR related dues as determined by the Hon'ble Supreme Court in the AGR case, by a period of 4 years with immediate effect.

(b) One-time opportunity to exercise the option of paying interest for the 4 years of deferment on the deferred AGR dues by way of conversion into equity of the NPV of such interest amount.