The Department of Telecommunications had recently put forward various options to the telecom players in connection with their AGR and spectrum liabilities.
Following the conversion of the dues, the Centre will hold 9.5 per cent stake in Tata Teleservices, it said in a regulatory filing on Tuesday.
The conversion, however, will be 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.
Earlier on Tuesday, Vodafone Idea too announced that it will convert its AGR and spectrum liabilities into equity.
"The board of directors, at its meeting held on January 10, 2022 has approved the conversion of the full amount of interest related to spectrum auction instalments and AGR dues into equity," Vodafone Idea said in a regulatory filing on Tuesday.
It is expected that the Centre will hold around 35.8 per cent of the total outstanding shares of the company, and that the promoter shareholders would be around 28.5 per cent (Vodafone Group) and around 17.8 per cent (Aditya Birla Group), respectively, the filing said.