Govt To Converts VI’s Spectrum Dues into Equity Shares, Raises Stake to 48.99%

The government will convert part of Vodafone Idea’s (Vi) spectrum payment dues, worth Rs 36,950 crore into equity shares. 

This will reduce financial liabilities of telecom company and help to improve its commercial viability, preventing a potential duopoly in the industry.

As a result, the government's stake in Vi will rise to approximately 48.99%, up from the current 22.6%. Vi's private sector promoters, Vodafone Plc (UK) and Aditya Birla Group (ABG), will still maintain control of operations but will see their ownership stakes decrease significantly.

Company insiders said Vodafone UK's stake in Vi will reduce to about 16.1% from 24.4%, while ABG's ownership will fall to 9.4% from just over 14%.

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“The Ministry of Communications... in line with the September 2021 Reforms and Support Package for the telecom sector has decided to convert the outstanding spectrum auction dues, including the deferred dues repayable after expiry of the moratorium period, 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 said in an exchange filing.

Earlier this month, Vi CEO Akshaya Moondhra requested the Department of Telecommunications (DoT) to convert more of the telco’s outstanding dues, including its adjusted gross revenue (AGR) and spectrum usage charge payments for airwaves purchased in the 2012, 2014, 2015, and 2016 auctions.

Under the telecom reforms approved by the Cabinet in September 2021, the government allowed struggling telecom companies to convert part of their debt into equity. In February 2023, after 16 months of talks, the government agreed to convert ₹16,000 crore of Vi’s interest liability into equity, giving the government a 33.1% stake.

The reforms package allowed converting the interest on the payment moratorium into equity, which Vi chose to do. It also gave the government the option to convert the principal of the moratorium into equity when the four-year payment moratorium ends in September 2025.

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