Vodafone Idea shares jumped as much as 12 per cent on Tuesday, touching Rs 8.18 during intra-day trade on the BSE after the Indian government significantly raised its stake in the telecom operator. Heavy volumes accompanied the rally, with nearly one billion shares changing hands across the NSE and BSE.
Vodafone Idea share price closed in the green, up 10.25 per cent at Rs 8.07 on April 21 on BSE. The company enjoys a market capitalisation of Rs 87,432.83 crore.
The stock’s rally followed an official disclosure confirming the Government of India had increased its holding in Vodafone Idea to 48.99 per cent, up from 22.60 per cent. The equity conversion was carried out via the President of India, represented by the Department of Investment and Public Asset Management (DIPAM) under the Finance Ministry.
Advertisement
The government’s decision comes in exchange for Rs 36,950 crore worth of unpaid spectrum auction dues. On March 30, Vodafone Idea’s board approved the allotment of 36.95 billion equity shares at Rs 10 each to DIPAM, formalising the state’s stake hike.
This is not the first time the government has intervened. In February 2023, Rs 16,130 crore in AGR and spectrum interest dues were converted into equity by New Delhi. But this latest move represents the government’s deepest level of involvement to date, positioning it just short of majority control while relieving the telco’s immediate financial pressure.
The telco’s challenges, though, remain formidable despite backing from the government. Total debt increased from Rs 2.03 lakh crore in the December 2023 quarter to Rs 2.17 lakh crore in the December 2024 quarter, primarily because of rising statutory liabilities. Of this, Rs 2.14 lakh crore is due to the government while Rs 2,300 crore is from banks and financial institutions.
Advertisement
Promoters Vodafone Group and Aditya Birla Group have seen their stakes diluted following the transaction. Vodafone UK’s holding has dropped to around 16.1 per cent, down from 24.4 per cent, while ABG’s share now stands at 9.4 per cent, down from over 14 per cent.
Nevertheless, both groups will retain operational control, even as the government becomes the largest shareholder on record.Vodafone Idea is currently focused on expanding 4G services across 17 priority circles and is actively negotiating bank loans to finance upcoming capital expenditures.
