Government raises stake in Vi to 48.99%, converts Rs 36,950 Cr dues into equity

The Government of India will increase its stake in Vodafone Idea (Vi) from 22.6% to 48.99% following the conversion of spectrum auction dues worth Rs 36,950 crore into equity shares, the telecom operator has informed the stock exchanges.

The conversion was approved by the Ministry of Communications through an order dated 29 March 2025, which the company received on 30 March. The move is part of the broader Telecom Reforms and Support Package announced in September 2021.

Earlier, according to an ET report, Vodafone Idea CEO Akshaya Moondra had urged the DoT to permit equity conversion of upcoming AGR and spectrum dues, thereby increasing government holding in the company to 49%. Vi had cited its financial challenges and inability to afford bank guarantees or cash payments, asking DoT to avoid coercive actions as regulatory payouts spike.

Why is the Government Raising Stake in Vi?

In its regulatory filing with the BSE and the National Stock Exchange, Vi stated that “the Ministry of Communications, Government of India has… 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.”

As per the directive, Vodafone Idea will issue 3,695 crore equity shares at a face value and issue price of Rs 10 each. The pricing methodology is based on the higher of the volume-weighted average price of the company’s shares during the last 90 trading days or the 10 trading days preceding the relevant date—26 February 2025. The final pricing is also subject to Section 53 of the Companies Act, which prohibits issuing shares below their par value.

The company has clarified that the issuance will take place within 30 days after it secures approvals from relevant authorities, including the Securities and Exchange Board of India (SEBI).

Following the allotment, the government’s holding in Vi will rise to 48.99%. However, the company has confirmed that operational control will remain with the existing promoter group. “The promoters will continue to have operational control of the company,” Vodafone Idea said in the filing.

The equity conversion is expected to significantly ease Vodafone Idea’s balance sheet, particularly when the company is working to shore up its financial position to support ongoing 4G expansion and 5G preparedness. The filing added that the company “will take all necessary actions to undertake the aforesaid issuance, upon receipt of the requisite approvals.”