Govt to convert Rs 37K cr Voda Idea dues into equity, raise stake to 49%

Vodafone Idea (Vi) said on Sunday that the government will convert its outstanding spectrum auction dues into equity shares worth ₹36,950 crore, increasing its stake in the beleaguered telecom company from 22.6 per cent to approximately 49 per cent.

The government is now the single-largest shareholder in the telecom firm.

“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.

Vi said it has been directed to issue 3,695 crore equity shares of the face value of ₹10 each at an issue price of ₹10 each within 30 days after the issuance of necessary order from relevant authorities, including from the regulatory authority, the Securities and Exchange Board of India (Sebi).

The move will allow the promoters Aditya Birla Group and Vodafone Plc to continue having operational control of the company.

Earlier this month, Vi Chief Executive Officer Akshaya Moondhra had written to the Department of Telecommunications (DoT) seeking further conversion of the telco's adjusted gross revenue (AGR) dues and spectrum usage charge payment instalments for airwaves acquired in the 2012, 2014, 2015 and 2016 auctions.

As part of the telecom reforms package approved by the Cabinet in September 2021, the government had allowed financially stressed telcos to convert part of their debt owed to the government into equity. In February 2023, the government finally assented to Vi converting ₹16,000 crore worth of interest liability payable to the government into equity after 16 months of discussions.

Subsequently, the Centre took a 33.1 per cent stake.

The reforms package had allowed converting the interest on the moratorium into equity, which Vi opted for. It also kept the option open for the government to convert the moratorium principal into equity around the time when the four-year payment moratorium ends in September 2025.

Beyond October, Vi had substantial payment obligations. Between then and March 2026, the company has to pay ₹12,000 crore to the government, taking into account principal and interest. Subsequently, it needs to pay ₹43,000 crore annually for five years, from 2026-27 to 2030-31.

At the end of the third quarter (October–December) of FY25, Vi’s dues to banks and financial institutions reduced to ₹2,330 crore, down from ₹7,620 crore in the year-ago period. However, the company has deferred spectrum payment obligations of ₹1.38 trillion and an adjusted gross revenue liability of ₹69,020 crore due to the government.