Vodafone Idea Share Price Zooms 10.81% As Government Increases Stake

The Indian government has officially increased its stake in the financially struggling telecom operator Vodafone Idea (Vi) to 48.99 per cent from 22.60 percent. This increase followed the conversion of ₹36,950 crore of the company’s spectrum payment dues into equity shares. This move by the government occurred on Monday, April 21, 2025. The share price of the company closed at ₹8.10, up by 10.81%.

Aim to Alleviate Financial Burden and Foster Competition 

The government's decision is intended to reduce Vodafone Idea's statutory liabilities by the same amount, thereby boosting its commercial viability. A key objective is to help prevent a telecom industry duopoly dominated by Jio and Bharti Airtel, promoting competition in the sector.

Reduced Stakes of Private Promoters 

While the government has become the largest shareholder, Vodafone Plc and Aditya Birla Group (ABG) will retain operational control. However, their stakes have been significantly diluted. Vodafone UK’s shareholding has decreased to approximately 16.1 percent from around 24.4 percent, and ABG’s ownership has dropped to 9.4 percent from just over 14 percent.

Previous Debt Conversion by the Government 

This is not the first instance of government intervention to ease Vi's financial woes. In February 2023, the government had also converted Vi’s debt of about ₹16,130 crore into equity. This previous conversion comprised interest arising from the deferment of adjusted gross revenue (AGR) and spectrum instalments.

Increasing Debt of Vodafone Idea 

Despite these measures, Vodafone Idea's debt has continued to rise. The company's debt increased by approximately 7 per cent to ₹2.17 lakh crore in the December 2024 quarter, primarily due to an increase in statutory liabilities. This is up from a total debt of ₹2,03,400 crore in the December 2023 quarter. Before the government's latest acquisition, Vi's ₹2.17 lakh crore debt included ₹2,14,700 crore in payment obligations to the government and ₹2,300 crore debt from banks and financial institutions.

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