Regarding Vodafone, the Department of Telecom said, converting debt into equity is an option

A consortium of banks led by State Bank of India (SBI) has told the Department of Telecommunications (DOT) that converting stressed telecom company Vodafone Idea Ltd (VIL)’s debt into equity could be an option to get the company out of trouble. DoT had on Friday called senior bank officials to discuss the challenges arising out of the Supreme Court order on dues related to Adjusted Gross Revenue (AGR) payable by telcos, including Vodafone Idea and Bharti Airtel. The apex court has given 10 years to telecom service providers to clear AGR dues of Rs 93,520 crore. Bank officials also told senior DoT officials that converting VIL’s debt into equity is an option, but not a permanent solution. Sources said that since VIL has not defaulted on repayment of its loans so far, they cannot take any action at the moment. Banks have converted debt of several stressed companies into equity in the past. According to sources, bankers said that in the current scenario, capital infusion by promoters is the best option. UK-based Vodafone holds 45 per cent stake in VIL, while Aditya Birla Group holds 27 per cent. Public and private sector lenders are expected to lose Rs 1.8 lakh crore in case VIL fails.