Vodafone Idea shares jump more than 24% on the BSE

Following the government's decision to convert the company's accrued interest, which totals Rs 16,133 crore and is the result of the deferral of AGR and spectrum dues into equity, shares of Vodafone Idea (Vi) soared over 24% to a high of Rs 8.57 on the BSE (Bombay Stock Exchange) on Monday.

Shares of Vi and Indus towers increased by nearly 10% and 15% respectively, in Monday morning trading on the BSE. On Monday morning while Vi's shares rose a high of Rs 8.57, Indus towers' shares were trading at Rs 161.58.

On January 27, 2023 the shares of the supplier of telecom services touched a record low of Rs 6.33. On the BSE and NSE, equity shares have been traded for about 500 million thus far. As of today, at around 10:50 AM, the stock had increased by 23% to Rs 8.35.

Now, in the fianancially precarious cellular joint venture between Vodafone and Aditya Birla Group, the government will maintain a 33% interest, making it the largest stakeholder. With this conversion, the promotions’ ownership will drop to 50% from 74.99%.

“Ministry of Communications…passed an order today i.e. 3 February, 2023… directing the company to convert the NPV of the interest related to deferment of spectrum auction instalments and AGR dues into equity shares to be issued to the government of India,” according to the company filing said.

“The total amount to be converted into equity shares is ₹16133,18,48,990. The company has been directed to issue 1613,31,84,899 equity shares of the face value of ₹10 each at an issue price of ₹10 each,” the filing added.

According to the most recent data released by telecom regulator TRAI, the telco has 24.3 crore mobile users, accounting for a 21.33% market share.

Vodafone Idea is the sole telecom provider that hasn’t placed any orders for 5G service equipment and has had trouble paying its vendors’ bills.

In response to Vodafone Idea’s weak financial sheet, Indus towers made a provision for doubtful debt totaling Rs 2.298.1 crore last month.