What an Idea! Govt Becomes Largest Shareholder in Vodafone Idea, Will Hold 35.8% Stake.

The government of India is set to become the largest shareholder of the telecom company Vodafone Idea, picking up up nearly 36% stake in the firm.

This comes after Vodafone Idea’s share price fell 20.88% on Tuesday to close at Rs 11.75 per share after the struggling telco’s board approved the conversion of AGR dues and spectrum interest into equity.

“It is now informed that the Board of Directors, at its meeting held on January 10, 2022, has approved the conversion of the full amount of such interest related to spectrum auction installments and AGR Dues into equity,” the company announced in a filing to BSE. 

Following the conversion of AGR dues, the Government will hold around 35.8% of the total outstanding shares of the Company, while the promoters Vodafone and Aditya Birla Group would hold around 28.5% and around 17.8% stake in the company, respectively, making the government the largest share holders of the company.

The net present value of interest is expected to be about Rs 16,000 crore, following final confirmation by the Department of Telecommunications, the company said. The equity shares will be issued to the government at par value of Rs 10 per share.

This reform by the government to provide an option to monetise interest portion of the AGR and spectrum dues for 4 years was targeted for Vodafone Idea given the company is facing such a cash crunch situation, Nitin Soni, Senior Director, Corporates at Fitch Ratings, told CNBC TV18. This will provide some cash flow relief to the company, and help them to expand their 4G spectrum, he added.