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Government Converts Vi Dues Into Equity; Stake Rises To 49 Percent

Synopsis:

The government will convert Rs 36,950 crore of Vodafone Idea's spectrum dues into equity, increasing its stake from 33.1% to nearly 49%. Vodafone Idea share price may react as the company plans to issue 3,695 crore new shares.


Vodafone Idea (Vi) confirmed that the Government of India will convert outstanding spectrum auction dues worth Rs 36,950 crore into equity shares. This move will raise the government's stake from the current 33.1% to approximately 49%, making it the single-largest shareholder in the financially stressed telecom company. The conversion aligns with the telecom reforms introduced in 2021, aimed at providing relief to debt-laden operators.

Also read: HBL Engineering Bags Rs 762 Crore Kavach Orders From Central Railway

VODAFONE IDEA LIMITED

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7.12-0.11 (-1.51 %)

Updated - 30 April 2025
7.29day high
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Key Takeaways

  1. Government stake in Vi to increase to around 49%

  2. Rs 36,950 crore worth of dues to be converted into equity

  3. 3,695 crore equity shares to be issued at Rs 10 face value

  4. Government becomes single-largest shareholder

  5. Promoters will retain operational control

  6. Vi’s deferred spectrum obligations total Rs 1.38 trillion

  7. AGR liability stands at Rs 69,020 crore

  8. Vi must pay Rs 12,000 crore by March 2026

  9. Rs 43,000 crore due annually from FY27 to FY31

  10. Vodafone Idea share price may react to dilution and control dynamics

Also read: BSE Board Approves 2:1 Bonus Issue; Stock Jumps Over 16% to Rs 5,438

Equity Issuance And Financial Restructuring

Vi will issue 3,695 crore equity shares at Rs 10 each to the government within 30 days, following necessary regulatory approvals. This capital restructuring is part of the broader telecom relief package approved in 2021, allowing telcos to convert liabilities into equity. Earlier in 2023, the government had converted Rs 16,000 crore of Vi’s interest dues into equity, taking a 33.1% stake.

Ongoing Financial Burden

Despite this equity infusion, Vi continues to face substantial financial obligations. The company needs to pay Rs 12,000 crore in government dues by March 2026 and an additional Rs 43,000 crore every year for five years from FY27. As of Q3 FY25, Vi’s dues to banks and financial institutions reduced to Rs 2,330 crore from Rs 7,620 crore a year earlier. However, its large deferred spectrum and AGR dues remain a challenge.

Stock Market Implications

The equity dilution may influence Vodafone Idea share price in the short term as investors assess the implications of increased government control and ongoing liabilities. While the move provides some balance sheet relief, long-term viability depends on fresh capital infusion and market share recovery. Investors will closely monitor Vodafone Idea share price and regulatory developments ahead of the share issuance.

Vodafone Idea Dues Conversion Summary

Particulars

Details

Dues converted into equity

Rs 36,950 crore

New government stake

~49%

Equity shares to be issued

3,695 crore shares

Face value per share

Rs 10

Previous conversion (Feb 2023)

Rs 16,000 crore (33.1% stake)

AGR liability

Rs 69,020 crore

Spectrum dues

Rs 1.38 trillion

Dues to be paid by March 2026

Rs 12,000 crore

Annual dues (FY27–FY31)

Rs 43,000 crore

Vodafone Idea share price impact

May react to dilution and restructuring

Also read: HAL signs Rs 62,700 crore LCH deal with MoD; shares end at Rs 4,176

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