ATC opts to convert Rs 1,440 crore Voda Idea debt bonds into equity

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Vodafone Idea (Vi) will issue equity shares worth Rs 1,440 crore to ATC Telecom Infrastructure Private Limited (ATC TIPL), the Indian arm of American Tower Corporation, Vi said on Tuesday.


On 18 March, ATC TIPL requested that the 14,400 optionally convertible debentures (OCDs) held by it be converted into 144 crore shares at a face value of Rs 10 each, the telecom operator said in an exchange filing. The move will marginally reduce Vi’s debt burden.


Back in February 2023, loss-making Vi had allotted OCDs worth Rs 1,600 crore to ATC TIPL against dues owed to the latter. The proceeds were being used by Vi to clear its dues to the US tower company, estimated at upwards of Rs 2,000 crore. OCDs are debt securities which let the issuer raise capital by initially issuing debentures. In return, the issuer pays interest to the investor till the maturity date.


In the second quarter of the calendar year 2023, ATC had said that it recognised Rs 238.5 crore ($29 million) unrealised gain on the OCDs.


The conversion price of Rs 10, at the time of OCD issuance, was at a premium to the then prevailing market price of Vodafone Idea shares. Subsequently, the term of redemption of the first tranche of OCDs amounting to Rs 800 crore was extended from the initial six months to 18 months, in August 2023.


“ATC TIPL is one of the largest infrastructure service providers for VIL and both entities have a long-term relationship,” Vi said on Tuesday. After the latest announcement, ATC TIPL would still hold OCDs worth Rs 160 crore.


However, ATC’s India business is itself set for a change in corporate ownership this year. In January, Canada-based Brookfield Asset Management acquired ATC TIPL for an enterprise value of Rs 16,628 crore ($2 billion). The transaction is subject to regulatory approvals and is expected to close in the second half of 2024, Brookfield said.


The combined entity is expected to have over 253,000 towers, trumping the current market leader Indus Towers and its 204,000 tower sites.

First Published: Mar 19 2024 | 8:46 PM IST