Centre To Convert Vodafone Idea Spectrum Dues Worth Rs 36,950 Crore Into Equity

New Delhi: In a pivotal move aimed at stabilizing India’s debt-stricken telecom sector, the government has announced plans to convert Vodafone Idea’s spectrum auction dues worth Rs 36,950 crore into equity. This strategic decision will significantly increase the government’s stake in the company from 22.6% to approximately 48.99%. The move not only marks a substantial financial rescue for Vodafone Idea but also underscores the government’s commitment to supporting the sector through innovative financial restructuring.
Vodafone Idea’s spectrum auction dues, amounting to Rs 36,950 crore, will now be converted into equity by the government. This move aligns with the telecom sector relief package announced in September 2021. As part of this process, Vodafone Idea will issue 3,695 crore equity shares at a face value of Rs 10 each. These shares must be issued within 30 days of receiving the necessary regulatory approvals.
The increased equity stake will see the government’s holding rise to 48.99%. Despite this significant increase, the operational control of Vodafone Idea will remain with its promoters, Aditya Birla Group and Vodafone Group UK. This balance ensures that while the government gains a larger equity stake, the core management and strategic direction of the company remain unchanged.
The September 2021 telecom reforms included provisions for converting part of the debt owed to the government into equity. This measure was designed to provide relief to financially stressed telecom companies like Vodafone Idea. Earlier requests from Vodafone Idea’s CEO, Akshaya Moondra, including conversion of spectrum auction dues and Adjusted Gross Revenue liabilities, underscore the company’s efforts to manage its financial obligations.
The company’s inability to pay cash or provide guarantees for past spectrum auction shortfalls has been a pressing concern. The equity conversion will help alleviate these financial strains, providing Vodafone Idea with a critical lifeline as it navigates a competitive telecom landscape.