The third-largest Telecome company, Vodafone Idea abbreviated as Vi in a regulatory statement said that the Indian government would own 35.8% of the mobile operator after its board approved the conversion of dues into equity. With this, the Indian government becomes the single largest shareholder of the operator, The Quint reported.
The move comes after the company’s board approved the transfer of the full interest on the Spectrum auction installments and the arrears owed to the government for using the airwave. Following the conversation, the Indian government will hold about 35.8% of the total outstanding shares of the company, and the promoter shareholders Vodafone Group would hold around 28.5% and Aditya Birla Group around 17.8%, the telecom operator announced in an exchange filing.
As per the Vi estimate, the ‘current value’ of interest is approximately Rs 16,000 crore ($ 2.16 billion). Vi had 43.5 crore subscribers as of Q1FY19 which has reduced to 25.3 crores by Q2FY22. The competition in the telecom sector is waving and Vodafone Idea has a large number of subscribers. As of March, the company’s total debt stood at Rs 1.80 trillion.
Also, the move comes in the wake of a telecom relief package announced by the government in September last year, including a spectrum payment moratorium, the option to convert airwave’s interest to equity, and a reduction in bank guarantees.
The decreasing profit of the mobile company’s services has been marked since the emergence of Mukesh Ambani’s Jio in the telecom sector. From there, the Britains’ Vodafone and billionaire Kumar Mangalam Birla’s Idea decided to join hands together to become the new brand with the name ‘Vi’. However, so far, the government has paid Rs 7,854 crore in arrears. But it still owes about Rs 50,000 crore.
While it has accepted the four-year moratorium, it now becomes the only telco to accept equity conversion as well. Rival Bharti Airtel on the other hand has opted for the moratorium but not the equity conversion while Reliance Jio went for neither.