Vodafone Idea Makes Government Top Shareholder To Pay Dues

Story Highlights
  • Government to own 35.8% in Vodafone Idea in new rescue plan.
  • Vodafone Group Plc will own 28.5% and Aditya Birla Group will have 17.8% in the company.
  • VIL has decided to opt for converting about Rs 16,000 crore interests.

Mumbai: Vodafone Idea Ltd.’s board has approved a rescue plan under which it plans to convert past exchequer dues into equity, giving 35.8 per cent stake to the Indian government and making it the largest shareholder in the country’s no. 3 wireless phone operators. The wireless carrier said in a stock exchange filing that this would lead to dilution for all the existing shareholders of the company, including its founders, leaving the Vodafone Group Plc with 28.5 per cent ownership and Aditya Birla Group with around 17.8 per cent ownership.

Debt-ridden Vodafone Idea (VIL) has decided to opt for converting about Rs 16,000 crore interest dues liability payable to the government into equity, as per a regulatory filing of the telecom firm. VIL said that since the average price of the company’s shares at the relevant date of August 14th, 2021 was below par value, the equity shares will be issued to the government at par value of Rs 10 per share, subject to final confirmation by the DoT. Vodafone’s financial health had taken a hit after Reliance Jio Infocomm Ltd triggered a price war in 2016, quickly becoming the top player.

Chief Operating Officer of Mumbai-based financial services firm JST Investments, Aditya Kondawar said, “Vodafone Idea is a heavily indebted company. Only the adjusted gross revenue (AGR) and spectrum dues have been converted to equity. The competition in the telecom space has heated up and Vodafone Idea has a heavy chunk of subscribers. It had 43.5 crore subscribers as of Q1FY19 which has reduced to 25.3 crores by Q2FY22. Only the promoter has changed, the challenges for the company haven’t.” The company’s total debt stood at Rs 1.80 trillion as of March 2021.

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