{"id":32332,"date":"2023-02-03T08:32:35","date_gmt":"2023-02-03T03:02:35","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=32332"},"modified":"2025-04-19T10:38:19","modified_gmt":"2025-04-19T05:08:19","slug":"vodafone-idea-centre-approves-2-billion-debt-to-equity-plan","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/vodafone-idea-centre-approves-2-billion-debt-to-equity-plan\/","title":{"rendered":"Vodafone Idea | Centre approves $2-billion debt-to-equity plan"},"content":{"rendered":"<h3><strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in news?<\/strong><\/li>\n<li><strong>What is AGR?<\/strong><\/li>\n<li><strong>What is the controversy surrounding the calculation of AGR?<\/strong><\/li>\n<li><strong>Legal battle over definition of AGR<\/strong><\/li>\n<li><strong>Final Ruling on AGR issue<\/strong><\/li>\n<li><strong>What are the steps taken by Government after SC Judgement of 2020 on AGR issue?<\/strong><\/li>\n<li><strong>News Summary: Vodafone Idea | Centre approves $2-billion debt-to-equity plan<\/strong><\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>Why in news?<\/strong><\/h2>\n<ul>\n<li>The government has approved the conversion of \u20b916,133 crore (Approx $ 2 bn) interest dues of Vodafone Idea (Vi) into equity.\n<ul>\n<li>With this, the govt would become the single largest shareholder in the cash-strapped telecom company.<\/li>\n<\/ul>\n<\/li>\n<li>The relief for the company comes as part of the reforms package announced by the government in September 2021.\n<ul>\n<li>The reform package had allowed telecom companies to convert interest on deferred Adjusted Gross Revenue (AGR) owed to the government into equity.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is AGR?<\/strong><\/h2>\n<ul>\n<li>Telecom operators are required to pay licence fee and spectrum charges <u>in the form of revenue share to the Centre<\/u>.\u00a0<\/li>\n<li>The revenue amount used to calculate this revenue share is termed as the AGR.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is the controversy surrounding the calculation of AGR?<\/strong><\/h2>\n<ul>\n<li>As per Dept of Telecom, the revenue calculations should incorporate all revenues earned by a telecom company.\n<ul>\n<li>This also includes revenues <u>from non-telecom sources such as deposit interests and sale of assets<\/u>.<\/li>\n<\/ul>\n<\/li>\n<li>The companies, however, are of the view that AGR should comprise the revenues generated from telecom services only.\n<ul>\n<li>Non-telecom revenues should be kept out of it.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>Legal battle over definition of AGR<\/strong><\/h2>\n<ul>\n<li>The telcos and the government were involved in the legal battle over the definition of AGR to include the source of revenues.\u00a0<\/li>\n<li>In October 2019, the top court <strong>widened the definition of AGR<\/strong> to include the government&#8217;s view.<\/li>\n<li>The court ordered to include all revenues, except for termination fee and roaming charges, as a part of the AGR.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>What is the stand of the Supreme Court on the AGR issue?<\/strong><\/h2>\n<ul>\n<li>On September 1, 2020, the Supreme Court gave its final ruling on the AGR issue.<\/li>\n<li>It had directed <u>telecom companies to pay AGR, interest and penalty on non-payment on AGR dues<\/u>.<\/li>\n<li>Telecom service providers were asked by the SC to make payments in yearly instalments between April 1, 2021 and March 31, 2031<strong>.<\/strong>\n<ul>\n<li>In case of default on payment, interest and penalty on interest would automatically be payable, and that <strong>non-payment would be punishable for contempt of court<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>What are the steps taken by Government after SC Judgement of 2020 on AGR issue?<\/strong><\/h2>\n<ul>\n<li>In September 2021, the Union Cabinet had cleared the telecom reforms package aimed at improving liquidity and ease of doing business.<\/li>\n<li>Telecom companies were provided with the option of <u>four-year moratorium on spectrum and AGR dues<\/u>.\u00a0\n<ul>\n<li>This meant that telecom companies could opt to pay the principal, the interest, and all other penalties, after four years, instead of paying it then.<\/li>\n<\/ul>\n<\/li>\n<li>The government had also given all the telcos a one-time opportunity to <strong><u>convert the interest on this deferred payment into equity<\/u><\/strong> at the end of the four-year period.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>News Summary: Vodafone Idea | Centre approves $2-billion debt-to-equity plan<\/strong><\/h2>\n<ul>\n<li>The Union government cleared a long-awaited plan to convert Vodafone Idea\u2019s (Vi) interest dues worth more than Rs 16,000 crore (or $2 billion) into equity.<\/li>\n<li>With this, the government would pick up around 33% stake in the company to emerge as the largest shareholder.\n<ul>\n<li>The government will pick up the equity at par value of 10, in line with the Companies Act provisions.<\/li>\n<\/ul>\n<\/li>\n<li>The move came after promoters Aditya Birla group and Vodafone Plc assured that they will infuse additional capital in the company, apart from kickstarting the exercise to launch the high-speed 5G network.\n<ul>\n<li>Government wants want India to be a three-player market plus BSNL and ensure healthy competition for consumers.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/wQkLKPGdC6HwhX2hrc3Qx9nLE67K_3VJNPz9X1bg4c_mwm5sjXuBZ53-M_iZa07VBK80IM05dC4ZHK94tUII3LjwFqHtR2XoxbBatWnMnoWbbrGKqXsQLVbNUL75GNThg1AsWLLPUWLBH7Kf6PnAAA\" alt=\"\" \/><\/p>\n<p>Image caption: News Summary &#8211; Vodafone Idea &#8211; Centre approves $2-billion debt-to-equity plan<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1)<\/strong>\u00a0<strong>What is spectrum for telecom companies?<\/strong><\/h3>\n<p>Spectrum relates to the radio frequencies allocated to the mobile industry and other sectors for communication over the airwaves.\u00a0<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<h3><strong>Q2)\u00a0What is bandwidth?<\/strong><\/h3>\n<p>Bandwidth is the portion of the spectrum that a given telecommunications system can use. For example, a system that operates on frequencies between 150 and 200 MHz has a bandwidth of 50 megahertz. An important distinction in spectrum technology is the difference between narrowband and broadband.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/india-asks-vodafone-idea-to-convert-govt-dues-into-equity-worth-2-bln-8422711\/#:~:text=%E2%80%9CThe%20total%20amount%20to%20be,10%20each%2C%E2%80%9D%20it%20added.&amp;text=Rs%2016%2C000%20crore%20of%20interest%20liability%20payable%20to%20the%20government%20into%20equity.\" target=\"_blank\" rel=\"nofollow noopener\"><u>Govt OKs $2-billion debt-to-equity plan for Vodafone Idea<\/u><\/a>\u00a0 <strong>|\u00a0<\/strong>\u00a0<a href=\"about:blank\" target=\"_blank\"><u>PIB<\/u><\/a>\u00a0 <strong>|\u00a0 <\/strong><a href=\"https:\/\/www.thehindu.com\/business\/Industry\/vodafone-idea-centre-approves-conversion-of-16133-crore-interest-dues-into-equity\/article66467930.ece\" target=\"_blank\" rel=\"nofollow noopener\"><u>The Hindu<\/u><\/a>\u00a0 <strong>|<\/strong>\u00a0 <a href=\"https:\/\/timesofindia.indiatimes.com\/business\/india-business\/vodafone-idea-gets-a-lifeline-govt-to-hold-33-stake-in-it\/articleshow\/97588648.cms?from=mdr\" target=\"_blank\" rel=\"nofollow noopener\"><u>Times of India<\/u><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Telecom operators are required to pay licence fee and spectrum charges in the form of revenue share to the Centre.<\/p>\n","protected":false},"author":5,"featured_media":32335,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-32332","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/32332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=32332"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/32332\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/32335"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=32332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=32332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=32332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}