The Centre has decided to increase its stake in Vodafone Idea from 22.60 per cent to 48.99 per cent by converting debt worth ₹36,950 crore into equity. This move will dilute the stakes of the Aditya Birla Group and Vodafone Plc, though they will continue to retain operational control of the company.
The company has been directed to issue 3,695 crore equity shares of the face value of ₹10 each at an issue price of ₹10 each within a period of 30 days. Vodafone Idea’s shares had closed at ₹6.81 per share on Friday on BSE. The company explained that the pricing of shares to be allotted has been arrived basis the higher of the volume weighted price of equity shares during the last 90 trading days.
“It is hereby informed that Ministry of Communications, has, in line with the September 2021 Reforms and Support Package for Telecom Sector, decided to convert the 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,” Vodafone Idea said in an exchange notification.
The moratorium period for the payment of dues on Adjusted Gross Revenue (AGR) and spectrum auctions held before FY21 is set to end on September 25. Experts said that the latest debt to equity conversion by the Centre may not be enough the bail out the beleaguered telecom company although there will be some financial relief in the short term.
“The company is likely to remain in survival mode, struggling to secure the investments needed to expand and upgrade its network. This weak financial position could ultimately harm India’s telecom sector by eroding market competition, limiting innovation, and reducing consumer benefits. Without a structural overhaul of telecom pricing policies, spectrum auctions, and AGR regulations, the industry will continue facing recurring financial instability, forcing repeated government interventions rather than achieving sustainable growth,” Parag Kar, an independent telecom expert, wrote in a recent blogpost.
Vodafone Idea has faced persistent challenges in raising funds to support its capital expenditure. With banks reluctant to extend fresh loans, the promoter group infused ₹1,980 crore in December 2024. Earlier, in April, the company successfully completed a follow-on public offer, raising ₹18,000 crore. However, these amounts remain a fraction of Vodafone Idea’s total debt burden, which stands at ₹2.13 lakh crore.
