Government Boosts Vodafone Idea with Major Stake Increase

Shares of Vodafone Idea surged following the government's acquisition of a larger stake. The move sees government ownership rise to 48.99%, as it converts Rs 36,950 crore of outstanding spectrum auction dues into stocks. This provides significant relief and support to the telecom company.

On Tuesday, Vodafone Idea's shares skyrocketed by 10% as the government announced its plan to more than double its stake in the company to 48.99%. The acquisition involves converting Rs 36,950 crore worth of outstanding spectrum auction dues into equity, a significant move for the telco.

The stock price limited at Rs 7.49 on the BSE and Rs 7.48 on the NSE, marking the highest permissible trading limit for the day. The government will now surpass the combined holding of Vodafone and Aditya Birla Group, the company's promoters, who currently hold a 14.76% and 22.56% stake, respectively.

This decision aligns with the September 2021 Reforms and Support Package for the Telecom Sector. Brokerage firm Citi views this development as timely, providing cash flow relief to Vodafone Idea in the next three years and aiding in a long-awaited bank debt raise.

(With inputs from agencies.)