Government to Increase Stake in Vodafone Idea to 48.99% Following Equity Conversion Deal

The government plans to convert Vodafone Idea’s Rs. 36,950 crore spectrum dues into equity, taking its holding to 48.99% from 22.6%. This will consolidate the government as the biggest shareholder in the ailing telecom operator.

The government will receive 3,695 shares at a price of Rs.10 per share, according to the company’s regulatory filing on Sunday. The shares will be issued within 30 days of the order. This decision is part of the relief package introduced for the telecom sector in September 2021.

The pending spectrum dues will be paid after the moratorium period ends. The promoters will still maintain control over the company’s operations.

The Ministry of Communications, following the reforms and support package announced in September 2021 for the telecom sector, has decided to convert Vodafone Idea’s outstanding spectrum auction dues into equity shares. This will also encompass outstanding payments that are to be paid after the moratorium period. Therefore, equity shares amounting to Rs.36,950 crore will be raised from the Government of India, Vodafone Idea informed in its BSE filing.

“After issuing these equity shares, the Government of India’s shareholding in the company will increase from the existing 22.60% to approximately 48.99%. However, the promoters will retain operational control of the company,” the filing stated.

Vodafone Idea’s CEO, Akshaya Moondra, had written to the telecom department requesting approval to convert its spectrum auction dues and Adjusted Gross Revenue (AGR) dues from 2012 to 2016 into equity. Vodafone Idea is unable to pay Rs.5,431 crore in cash or offer a bank guarantee to cover the shortfall from the 2015 spectrum auction.

Vodafone Idea’s shares fell by 1.73% to Rs.6.81 at the end of the stock market session on Friday, March 28. This was down from Rs.6.93 at the previous closing.