In fresh lifeline for Vodafone, govt converts $4.3 billion dues into equity

India will convert about $4.3 billion (Rs36,950 crore) of Vodafone Idea Ltd’s spectrum dues into equity, doubling the government’s stake in the telecom operator to 48.99% from 22.6% now, the company said in a statement to the exchanges on Sunday.

The shareholding of promoters will fall from 36% to 26% following the fresh issue of shares to the government, but they “will continue to have operational control of the company,” Vodafone’s statement said.

While parent Vodafone Group Plc’s stake will fall to 16.1% from 294.4% currently, limiting its ability to veto special resolutions, the ownership stake of Aditya Birla Group chairman K.M. Birla and affiliated entities will decline to 9.4% from 14%, The Economic Times reported, citing company insiders.

The government’s bid to revive the cash-strapped telecom firm is a fresh lifeline of sorts, and comes after a similar move in February 2023.

The company said it has been directed to issue 36.95 billion equity shares of the face value of Rs10 each at an issue price on part within 30 days from the issue of necessary orders from relevant authorities including the Securities and Exchange Board of India (Sebi), the company statement said.

The pricing of shares to be allotted to the government is based on the higher of the volume weighted price over the past 90 trading days or the 10 days before 26 February, as per section 53 of the Companies Act, 2013, which mandates that shares cannot be issued below par value, the company added.

The government’s directive will offer Vodafone some respite even as it stares at climbing regulatory payouts after a moratorium on payments ends in September, the ET report said, citing analysts.

Vodafone Idea is required to pay Rs29,000 crore dues, including for spectrum and adjusted gross revenues, in the second of fiscal 2026, which will now reduce to Rs11,000 crore, the report said, adding that from fiscal 2027, the annual instalment would come down to about Rs17,000 crore from Rs43,000 crore.

The government’s support comes a few weeks after chief executive Akshat Moondra wrote to telecom department secretary Neeraj Mittal  to urgently allow equity conversion of the telco’s upcoming adjusted gross revenue  and purchase dues relating to the 2012, 2014, 2015 and 2016 spectrum auctions as the telecom firm was staring at a spike in payouts, ET had reported.