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01-04-2025
Bureau Report + Agencies
NEW DELHI: The Indian government will increase its stake in Vodafone Idea (VODA.NS), opens new tab to approximately 48.99% by converting 369.5 billion rupees ($4.3 billion) in outstanding spectrum auction dues into equity, a regulatory filing from the company showed on Sunday.
The Ministry of Communications has directed Vodafone Idea to issue 36.95 billion shares at 10 rupees each, the filing said, boosting the government’s stake from 22.6%. The government is already the largest shareholder in the telecom company, according to LSEG data.
Vodafone Idea formed by a merger between the Indian arm of the UK’s Vodafone Group, opens new tab and Aditya Birla Group’s Idea Cellular in 2018, said its initial investors will continue to have operational control despite the increased government stake.
The move aligns with the government’s September 2021 relief package announced for the telecom sector.
In December, the company announced a plan to raise up to 19.80 billion rupees through the issue of preferential shares.
As of September 2024, the debt-saddled firm’s total debt pile stood at 2.16 trillion rupees, including deferred spectrum payment obligations it owes to the government.
The company in February reported a smaller-than-expected third-quarter loss.
In December, last year, Vodafone Idea, opens new tab will raise up to 19.80 billion rupees ($233.8 million) through the issue of preferential shares, the Indian telecom company said on Monday.
Vodafone Idea said it will issue shares to Vodafone Group entities Omega Telecom Holdings and Usha Martin Telematics worth up to 12.8 billion rupees and 7 billion rupees, respectively.
The fundraise will likely help the debt-saddled firm pay some of its dues to network infrastructure provider Indus Towers, opens new tab, to which it owes about 50-60 billion rupees, according to Ambit Capital’s Vivekanand Subbaraman.
Vodafone Idea did not specify details about its plans to use the funds.
As of September-end, its total debt pile stood at 2.16 trillion rupees, including deferred spectrum payment obligations it owes to the government.
The company, formed by a merger between the Indian arms of the UK’s Vodafone Group, opens new tab and Aditya Birla Group’s Idea Cellular in 2018, has so far raised about 240 billion rupees in the year.
Parent Vodafone Group announced last week that it was selling its remaining 3% stake in Indus Towers. It will use proceeds to repay its borrowings and infuse fresh capital into Vodafone Idea to help it pay its past dues to Indus, it said.
In 2021, India’s federal cabinet on Wednesday approved a relief package for its cash-strapped telecoms sector including a four-year moratorium on airwaves payments due to the government, the country’s telecoms minister said.
The deferred payments cycle will begin from Oct. 1, telecoms Minister Ashwini Vaishnaw told a news conference, giving debt-ridden Vodafone Idea, opens new tab which previously said it runs the risk of a shutdown without government help more time to pay dues.
Shares in Vodafone Idea rose 2.9% on the news, while Bharti Airtel closed 4.5% up in a broader Mumbai market, opens new tab that closed 0.8% higher.
Some of the other measures announced in the telecoms package include raising the tenure of airwaves held by firms to 30 years from the current 20 years, waiving the usage charge for airwaves acquired via future auctions, and completely free sharing of spectrum between carriers, Vaishnaw said.
