Vodafone Idea gets another relief: Government to raise stake to 49%; all you need to know

The government's stake will be more than double to 48.99% as it is set to acquire shares worth ₹36,950 crore in place of outstanding spectrum auction dues, the telco said.

The government is already the single-largest shareholder in the battered company with a 22.6% stake, and the fresh move will take its total holding to more than the combined stake of the company's promoter firms – Vodafone and Aditya Birla Group.

VIL promoters hold 14.76% and 22.56% stakes in the company, respectively, at present. However, the promoters will continue to have operational control of the company, Vi said in its regulatory filing.

"The Ministry of Communications, in line with the September 2021 Reforms and Support Package for the Telecom Sector, has decided to convert the outstanding spectrum auction dues, including deferred dues repayable after the expiry of the moratorium period, into equity shares to be issued to the Government of India. The total amount to be converted into equity shares is ₹36,950 crore," the filing said.

The spectrum and adjusted gross revenue (AGR) installment due for FY26, including the 2015 spectrum auction shortfall, aggregated to ₹32,723.5 crore.

The move follows a series of relief from the government to help the company remain afloat in the market to maintain competition.

Vodafone Idea's ₹18,000 crore FPO: A quick recap

In April 2024, debt-saddled telecom operator Vodafone Idea launched the largest-ever follow-on offering (FPO) of ₹18,000 crore to raise funds.

Before this, the largest FPO in the Indian market was a ₹15,000 crore share sale by YES Bank in 2020.

The Vodafone Idea's FPO was subscribed more than 3.3 times, as institutional investors poured in money, but the retail segment lagged.

The fundraise, the company had said, would give the telco the firepower to improve its positioning in the Indian telecom market, where it currently trails larger rivals such as Reliance Jio and Bharti Airtel by a wide margin."

The funds will also help Vodafone Idea shore up finances for the much-delayed 5G rollout and strengthen 4G services and payment of vendor dues, the telco had said.

Vodafone Idea: Recent updates

As of December 2024, the outstanding debt from banks (including interest accrued but not due) of the group is ₹2,345.1 crore, and the deferred payment obligation towards spectrum payable over the years till FY44 and AGR (including interest accrued but not due) payable over the years till FY31 aggregates to over ₹2.27 lakh crore.

In February 2023, the government approved the conversion of over ₹16,133 crore in interest dues of Vodafone Idea into equity after a firm commitment from the Aditya Birla Group to run the company and bring necessary investments.

Thereafter, the government decided to waive off bank guarantees that were required to be submitted for spectrum auctions held before September 2021.

The move provided relief to the company from submitting bank guarantees aggregating to about ₹24,800 crore against spectrum installment dues.

Vodafone Idea history

The entry of Reliance Jio in 2016 led to a consolidation in the Indian telecom sector. It was announced in March 2017 that Vodafone India and Idea Cellular would be merged. The merger got approval from the Department of Telecommunications in July 2018. On August 30, 2018, the National Company Law Tribunal (NCLT) gave the final nod to the Vodafone-Idea merger.

The merger created the country's largest telecom company, with 408 million active subscribers and a revenue market share of 32.2%. The merger was completed on August 31, 2018, and the newly merged entity was named Vodafone Idea.

"Vodafone will own 45.1% in the new company after transferring 4.9% to the Aditya Birla group for ₹3,874 crore in cash concurrent with the completion of the merger. Idea will hold 26% of the combined entity, while the rest will be owned by public shareholders," the companies had said post-merger.