Government Boosts Stake in Vodafone Idea with Major Equity Conversion

The Indian government is set to increase its stake in Vodafone Idea to 48.99% by converting Rs 36,950 crore of outstanding spectrum auction dues into equity. This move is expected to provide significant cash flow relief to the company and assist in its financial recovery over the next three years.

Shares of Vodafone Idea saw a significant rise of over 19% on Tuesday, following the announcement that the Indian government's stake in the company will more than double to nearly 49% through the conversion of Rs 36,950 crore worth of spectrum auction dues into equity.

The share price closed at Rs 8.10 on both BSE and NSE, marking a substantial leap from the previous day. The increased government stake positions it as the largest shareholder, overtaking the combined holdings of Vodafone and Aditya Birla Group.

This strategic conversion is part of the September 2021 Reforms and Support Package for the Telecom Sector, providing Vodafone Idea with much-needed financial relief, enabling better cash flow management and facilitating an anticipated bank debt raise, according to various analysts.

(With inputs from agencies.)