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Indian government to acquire stake in Vodafone Idea – reportIndian government to acquire stake in Vodafone Idea – report

Vodafone Idea has a massive debt of $24 billion and has been trying to acquire investment for the last several years.

Gagandeep Kaur

September 12, 2022

2 Min Read
Indian government to acquire stake in Vodafone Idea – report

The Indian government will acquire a stake in Vodafone Idea, the country's third-largest service provider, once the stock price stabilizes at 10 Indian rupees (US$0.12) or above, according to media reports.

Vodafone Idea's shares were trading at INR9.70 on Friday. Shares have been trading at less than INR10 for several months now.

Vodafone Idea has a massive debt of INR1.94 trillion ($24 billion) and has been trying to acquire investment for the last several years.

Figure 1: The Finance Ministry cleared the proposal to acquire a stake in Vodafone Idea in July 2022.
 (Source: Amlan Mathur/Alamy Stock Photo) The Finance Ministry cleared the proposal to acquire a stake in Vodafone Idea in July 2022.
(Source: Amlan Mathur/Alamy Stock Photo)

The company decided to convert around INR160 billion ($2 billion) of interest liability, payable to the government, into equity. This will amount to approximately a 33% stake in the company, making the government the largest stakeholder.

Vodafone Group, the largest stakeholder currently, will decrease its stake from 44.3% to 28.5%, and Aditya Birla Group's stake will drop to 17.5% from 27.7%.

Government's three-pronged stake

The investment means the Indian government will have a stake in three telcos: Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL) and Vodafone Idea.

The Indian administration says that it will not be actively involved in the company's operations, despite being Vodafone Idea's largest shareholder.

Earlier this year, the government offered to take equity to cover the interest owed by Vodafone Idea on payments for spectrum and dues on adjusted gross revenue (AGR), currently postponed by the moratorium. The Finance Ministry cleared the proposal to acquire a stake in Vodafone Idea in July.

While the government offered equity conversion to all service providers, it was primarily targeted at Vodafone Idea to ensure that the company continued to operate in the country to prevent a duopoly in the Indian telecom market.

Want to know more? Sign up to get our dedicated newsletters direct to your inbox. Vodafone Idea is the only service provider that opted for the equity conversion offer, which the Indian government offered as part of the telecom reforms last year. Related posts: Higher prices make more profitable consumers for India's telcos India's 5G spectrum auction: Who's won what? Telcos and tech companies slug it out for 5G spectrum in India What's up with Vodafone Idea's fundraising? — Gagandeep Kaur, contributing editor, special to Light Reading

About the Author(s)

Gagandeep Kaur

Contributing Editor

With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.

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