The Government of India has decided to convert Vodafone Idea’s outstanding spectrum auction dues into equity shares, meaning the money the telecom company owed for using spectrum (radio frequencies for communication) will now be taken as company shares instead of cash. This conversion is worth ₹36,950 crore, and as a result, the government’s stake in Vodafone Idea will increase from 22.6% to approximately 49%. However, the original promoters of Vodafone Idea will continue to control the company’s operations.
What Does This Mean?
Vodafone Idea had a huge amount of unpaid dues related to spectrum auctions. Instead of forcing the company to pay in cash, the government is giving relief by taking shares in exchange. This is part of the Telecom Reforms and Support Package, introduced in September 2021, which aimed to help struggling telecom companies in India.
How Will the Conversion Happen?
- The Ministry of Communications issued an order approving the conversion on March 29, 2025, and Vodafone Idea received the confirmation on March 30, 2025.
- Vodafone Idea will issue 3,695 crore new equity shares, each having a face value of ₹10.
- The share price will be determined based on stock market trends. It will be set at either:
- The average price of Vodafone Idea shares over the last 90 trading days
- The average price over the last 10 days before February 26, 2025
- Whichever is higher, in line with the Companies Act, 2013 (which ensures shares are not issued at a price lower than ₹10).
- This issuance will take place within 30 days, after receiving approvals from regulatory authorities like the Securities and Exchange Board of India (SEBI).
What will Happen Now?
- Government’s Shareholding Increases: The Indian government will now own about 49% of Vodafone Idea instead of the earlier 22.6%.
- Promoters Still in Charge: The original owners (Vodafone Group and Aditya Birla Group) will continue managing the company’s operations.
- Approval Process: Vodafone Idea must obtain necessary approvals before issuing the shares.
Why is this Important?
This move is part of the Indian government’s efforts to support the telecom industry, which has been struggling due to heavy financial burdens. Vodafone Idea has been facing losses, and this conversion helps the company by reducing its debt, making it easier to continue operations. It also ensures that India’s telecom sector remains competitive, preventing a situation where only a few companies dominate the market.
Vodafone Idea has assured that it will take all necessary steps to complete the process once all approvals are in place.
