Big Boost for Vodafone Idea: Government Steps In with 49% Stake

Vodafone Idea : The most recent Vodafone Idea update: With a 22.6% interest in the struggling company, the government is already the single-largest shareholder. With this new move, its overall holding would surpass the combined stake of the company’s parent corporations, Vodafone and Aditya Birla Group.

Vodafone Idea share price: When trading starts on Tuesday, April 1, following a long weekend, shares of the indebted telecom company Vodafone Idea (Vi) will be closely watched because the business announced in a regulatory filing on Sunday, March 30, that the government will acquire a substantial stake in the company.

With a 22.6% interest in the struggling company, the government is already the single-largest shareholder. With this new move, its overall holding would surpass the combined stake of the company’s parent corporations, Vodafone and Aditya Birla Group.

Currently, VIL promoters own 14.76% and 22.56% of the company, respectively.

In accordance with the September 2021 Reforms and Support Package for the Telecom Sector, the Ministry of Communications has made the decision to issue equity shares to the Indian government in exchange for the outstanding spectrum auction dues, including deferred dues that must be repaid after the moratorium period ends. “A total of ₹36,950 crore is to be converted into equity shares,” the document stated.

Within 30 days following the receipt of the required order from the appropriate authorities, including the Securities and Exchange Board of India (SEBI), Vodafone Idea (VIL) stated that it has been instructed to issue 3,695 crore equity shares with a face value of ₹10 each at an issue price of ₹10 each.

The total amount of the spectrum and adjusted gross revenue (AGR) payment that is due for FY26, including the shortfall from the 2015 spectrum auction, is ₹32,723.5 crore.

The action comes after the government provided a number of reliefs to enable the business stay afloat in the market and preserve competition.

A brief summary of Vodafone Idea’s ₹18,000 crore FPO :

Vodafone Idea, a telecom company beset by debt, raised ₹18,000 crore through the largest-ever follow-on offering (FPO) in April 2024.

Prior to this, YES Bank’s 2020 share sale for ₹15,000 crore was the biggest FPO in the Indian market.

The retail sector trailed behind the institutional investors who poured money into Vodafone Idea‘s FPO, which was subscribed more than 3.3 times.

The business claimed that the funds would provide the telco with the strength to strengthen its position in the Indian telecom sector, where it now lags well behind bigger competitors like Reliance Jio and Bharti Airtel.

According to the operator, the money would also assist Vodafone Idea boost 4G services, pay vendor debts, and shore up financing for the much-delayed 5G deployment.

Vodafone Idea: Current developments :

As of December 2024, the group’s outstanding bank debt (including interest accrued but not due) is ₹2,345.1 crore. Additionally, the deferred payment obligation towards Spectrum is payable between FY44 and FY31, and the total amount owed (including interest accrued but not due) is over ₹2.27 lakh crore.

Following the Aditya Birla Group’s resolute pledge to manage the business and provide the required funding, the government authorized the conversion of Vodafone Idea’s interest debts of more than ₹16,133 crore into equity in February 2023.

The government then made the decision to remove the need that bank guarantees be presented for spectrum auctions that took place before to September 2021.

The corporation was able to avoid presenting bank guarantees totaling around ₹24,800 crore against spectrum installment dues thanks to the action.

The history of Vodafone Idea :

The Indian telecom industry saw consolidation following the arrival of Reliance Jio in 2016. The merger of Idea Cellular and Vodafone . India was announced in March 2017. In July 2018, the Department of Telecommunications approved the merger. The National Company Law Tribunal (NCLT) finally approved the Vodafone-Idea merger on August 30, 2018.

With 408 million active users and a revenue market share of 32.2%, the combined business is now the biggest telecom provider in the nation. On August 31, 2018, the merger was finalized, and Vodafone Idea was the new combined company.

Following the completion of the merger, Vodafone would hold 45.1% of the new business after paying ₹3,874 crore in cash to the Aditya Birla group for 4.9% of the company. Following the merger, the firms stated that Idea would own 26 percent of the new company, with the remaining portion going to public shareholders.