Business

Vodafone Idea gets a lifeline, govt to hold 33% stake in it


NEW DELHI: The Centre finally stepped in to resurrect Vodafone Idea, the ailing telecom operator, and is going ahead to pick up around 33% stake in the company to emerge as the largest shareholder.
The move came after promoters Aditya Birla group and Vodafone Plc assured that they will raise as much as 20,000 crore, apart from kickstarting the exercise to launch the high-speed 5G network. The Centre’s move was put in place amid concerns the telecom sector needs at least three private players and to provide choice to customers.
The government will pick up the equity at par value of 10, in line with the Companies Act provisions, even though the telco’s shares closed at 7 on Friday, up 3%. “All the requisite approvals have been given by the government, and now Vodafone Idea will move ahead to give equity to the government,” a top source told TOI.

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At the end of December 2022, the promoters hold around 75% in Vodafone Idea, with Vodafone Plc holding 48% and Aditya Birla Group 27%. After the fresh equity infusion, the shareholding of the promoters will come down to around 50%, with the government emerging as the largest shareholder.
Friday’s approval by the department of telecom (DoT) stems from a decision taken by the Union Cabinet in September 2021 that had paved the way for the government to pick up equity in local telecom companies in case any of them opted for a moratorium on spectrum payments and AGR dues. The equity conversion is being undertaken in lieu of the interest payout for the delayed payments for those opting for the moratorium, which in Vodafone Idea’s case amounted to 16,133 crore.
In a statement Vodafone Idea said, “Ministry of communications, in line with the reforms and support package for telecom sector communicated earlier and the conversion option exercised by the company as provided for therein, passed an order… directing the company to convert the NPV (net present value) of the interest related to deferment of spectrum auction instalments and AGR dues into equity shares to be issued to the Government of India.”


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