Vodafone Idea Gets New Lifeline as Govt Converts Rs 36,950 Cr Dues into Equity, Ups Stake to 49% The regulatory filing stated that the Ministry of Communications has directed Vodafone Idea to issue 3,695 crore shares with a face value of INR 10 per share within the next month.
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Vodafone Idea gets a new lifeline as the government has decided to convert an additional INR 36,950 crore worth of the company's dues into equity, thereby increasing its stake in the debt-ridden telco to nearly 49 per cent from the current holding of 22.6 per cent.
The stake has been raised by converting the amount in "outstanding spectrum auction dues, including deferred dues repayable after expiry of the moratorium period, into equity shares to be issued to the Government of India under Section 62(4) of the Companies Act, 2013," the company said in its regulatory filing.
This is part of the telecom sector reforms and support package announced in September 2021. As per the reforms package, the government had allowed financially-stressed telcos to convert part of their debt owed to the government into equity.
The regulatory filing stated that the Ministry of Communications has directed Vodafone Idea to issue 3,695 crore shares with a face value of INR 10 per share within the next month.
According to data from the London Stock Exchange Group, even without the fresh capital infusion, the government was already the largest shareholder in the telecom company.
According to a Reuters report, Vodafone Idea, formed in 2018 through the merger of the Indian arm of the UK's Vodafone Group (VOD.L) and Aditya Birla Group's Idea Cellular, stated that its initial investors will maintain operational control, even with the increased government stake.
With the newer stake, it remains to be seen how much operational control will now be possible.
The company in December 2024 had announced a plan to raise up to 19.80 billion rupees through the issue of preferential shares.
While equity shares adjustment alleviates Vodafone Idea's spectrum payment obligations for FY26, the company still faces considerable debt challenges. It will need to repay approximately INR 43,000 crore annually from FY27 to FY31, JM Financial, a financial services company, projects.
