Vodafone Idea (Vi) announced that the government will convert its outstanding spectrum auction dues into equity shares worth ₹36,950 crore, increasing its stake in the struggling telecom company from 22.6 percent to approximately 49 percent.
The government is now the single largest shareholder in the telecom company.
"The Ministry of Communications... has decided, in accordance with the September 2021 Reforms and Support Package for the telecom sector, to convert outstanding spectrum auction dues, including deferred dues repayable after the moratorium period expires, into equity shares to be issued to the Government of India. "The total amount to be converted into equity shares is ₹36,950 crore," Vi stated in an exchange filing.
Within 30 days of obtaining the required directives from the appropriate authorities, such as the Securities and Exchange Board of India (Sebi), Vi has been instructed to issue 3,695 crore equity shares with a face value of ₹10 each at an issue price of ₹10 each.
The move will allow the Aditya Birla Group and Vodafone Plc to continue operating control of the company.
Vi Chief Executive Officer Akshaya Moondhra wrote to the Department of Telecommunications (DoT) earlier this month, requesting further conversion of the telco's adjusted gross revenue (AGR) dues and installment payments for spectrum usage charges for airwaves acquired in the 2012, 2014, 2015, and 2016 auctions.
The government permitted financially troubled telcos to convert a portion of their government debt into equity as part of the telecom reform package that was approved by the Cabinet in September 2021. After 16 months of discussions, the government approved Vi's conversion of ₹16,000 crore in interest liability to equity in February 2023.
The Centre subsequently acquired a 33.1% stake.
The reform package allowed Vi to convert the moratorium's interest into equity. It also left the door open for the government to convert the moratorium principal to equity around the time the four-year payment moratorium expires in September 2025.
Beyond October, Vi had significant payment obligations. The company is required to pay the government ₹12,000 crore, which includes principal and interest, between that time and March 2026. Paying ₹43,000 crore a year for five years, from 2026–2027 to 2030–2031 is required.
In the third quarter (October–December) of FY25, Vi's debts to banks and financial institutions dropped from ₹7,620 crore to ₹2,330 crore. The company owes the government ₹69,020 crore in adjusted gross revenue and ₹1.38 trillion in deferred spectrum payments.
