In a significant move to reduce the financial burden on telecom providers, the Government of India has announced the conversion of Vodafone Idea's outstanding spectrum auction dues into equity shares. For that, the Ministry of Communications has raised its stake to 48.99% in this company, in a strategic move to translate dues of ₹36,950Cr into equity.
This decision aligns with the Reforms and Support Package of September 2021 for the Telecom Sector. This includes deferred dues that are repayable post the expiration of the moratorium period, to be converted into equity shares and issued to the Government of India following Section 62(4) of the Companies Act, 2013. The communication received by Vodafone Idea via an official order passed on 29th March, 2025, and received by the firm on 30th March, 2025.
The outstanding amount to be converted into equity shares amounted to a substantial Rs. 36,950 crores. Through the move, the government aims to ease the company's financial debt and bolster its position. As part of the process, the company has been directed to issue equity shares worth 3,695 crore with a face value of ₹10 each and at ₹10 per share of issue price. Vodafone Idea must be instructed to issue the shares within 30 days after getting the necessary approval from the relevant authorities, including the Securities and Exchange Board of India (SEBI).
The pricing of these equity shares will be decided on the basis of higher of two measures: the volume-weighted price of Vodafone Idea's shares during the last 90 trading days till the Relevant Date (February 26, 2025), or the price as per the last 10 days of trading, with the precondition that the shares cannot be issued at par with their par value, following Section 53 of the Companies Act, 2013.
This move is significant for the company as it will alter the ownership structure. With the follow-up of the equity shares issuance, shareholding of the Government of India in Vodafone Idea will increase from its current 22.60% to around 48.99%. Despite this decreased stake, the company will have operational control over the promoters, ensuring that day-to-day management and strategic decisions will remain in Vi’s hands.
The move is expected to bolster Vodafone Idea's position in the market, enabling the company to focus on business growth while managing its financial commitments more effectively. The next steps will involve obtaining approval from SEBI and other regulatory bodies before the equity issuance is completed.
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