The Government of India has extended yet another lifeline to Vodafone Idea Ltd. by agreeing to pick up more stake in the debt-laden telecom operator in lieu of spectrum auction dues.
NDTV Profit had first reported this was in the works.
Vodafone Idea has been directed to issue 3,695 crore equity shares of face value Rs 10 apiece at par within 30 days of regulatory approvals, according to an exchange filing on Sunday. The total amount to be converted into equity shares is Rs 36,950 crore.
“Post the aforesaid issuance of equity shares, the Government of India’s shareholding in the company will increase from existing 22.60% to approx. 48.99%,” according to the exchange filing. “The promoters will continue to have operational control of the company.”
The move comes as a shot in the arm for Vodafone Idea as it had to pay up Rs 13,089 crore interest against spectrum dues in the coming weeks. The company had previously stated that it was in no position to repay dues.
With this conversion, Vi no longer has spectrum-related dues.
First Lifeline
The government had first picked up stake in Vodafone Idea in February 2023, when Vi issued equity shares worth Rs 16,133 crore equivalent to 33.44%. That made the centre the biggest shareholder in the company.
Those shares were allocated to the government in lieu of conversion of interest dues arising from the deferment of adjusted gross revenue and spectrum auction payments.
By April 2023, Vi had managed to reduce the government shareholding to 22.6% by way of a follow-on public offer worth Rs 18,000 crore.
In July 2024, Vi had sought to list a curative plea at the Supreme Court on the AGR dues case. The telecom firm was seeking a limited reconsideration of the judgment that held India’s telecom operators will have to include non-core revenue to calculate their adjusted gross revenue.
The Supreme Court dismissed the plea in September 2024.
“The government’s intent is clear that it will provide support if need arises,” Vodafone Idea’s Chief Executive Officer Akshaya Moondra had said during a post-earnings call in February. “Moreover, it is cognisant that support will be required on this issue. The government is the biggest stakeholder in this process. Therefore, we are confident that a solution will be found.”
As on Dec. 31, Vodafone Idea had a total debt of Rs 2,98,077 crore, and a net loss of Rs 6,609.3 crore. The top line was at Rs 11,117.3 crore.
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