Govt to Soon Become Biggest Shareholder of Vodafone Idea; Close to Holding 33% Stake

The Union government is all set to soon become the largest shareholder of Vodafone Idea Limited (Vi). The government will keep about 33 percent in the company after the telco’s accrued interest liability on deferred rights is converted to equity. According to Section 62(4) of the Companies Act, 2013, the government will convert the telecommunications company’s interest liability of Rs 16,133 crore into equity. This move will help the debt-ridden telecom giant achieve its fundraising goal.

“The government has almost a 33 percent stake in Vodafone Idea. The conversion of the dues will be completed shortly,” a government official told CNBC-TV18.

After conversion to equity, the Union government will hold about 33 percent in the company, while telco promoters – Vodafone Plc of the United Kingdom and Aditya Birla Group (ABG) of India together will hold about 50 percent in the company. Public would hold the rest of the shares in the company. Securities and Exchange Board of India (SEBI) has yet to give its final nod, the official added.

The company will account for the changes in the stock pattern after the stock conversion. The Union government will hold an interest in the company as part of a government property, not in a promoter category. It will not be on the telecom operator’s board, the official told CNBC-TV18.

Earlier in January, Ravinder Takkar, Vodafone Idea’s chief executive officer, said the company had chosen to convert government contributions into equity as part of the telecom reform package. However, the government’s share will be less than 35.8 percent, the figure the company quoted earlier. Earlier in March, Vodafone Group Plc and Aditya Birla Group pumped in Rs 4,500 crore in equity, increasing their joint stake from 72.05 percent previously to 74.9 percent.

Vodafone Idea has opted to pay adjusted gross receipts (AGR) of Rs 8,837 crore for FY18 and FY19 in six equal annual installments effective March 31, 2026. related contribution with immediate effect for a period of four years,” said Vodafone Idea.

Ahead of the auction of 5G spectrum airwaves, Vodafone Group Plc will inject an additional Rs 436 crore into Vodafone Idea through shares or warrants. This was the company’s second capital increase in two months. Vodafone Idea will issue 42.7 million shares or warrants to a promoter group entity at an issue price of Rs 10.20 per share added up to Rs 436.21 crore, the company said in a notification.

Once the stock conversion is complete, the company will need to raise outside funding. The government is confident that the country’s third-largest telco will turn itself around. “The Union government will dilute its equity stake in Vodafone Idea once its balance sheet improves,” the official said.

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