Vodafone Idea (VIL) had originally opted for converting dues into government equity in January 2022. A year later after getting commitment from promoters to infuse further funds, government in 2023 had converted Rs 16,133 dues into 33% equity @ Rs 10/ share.
Over the period the same got diluted to 22.63% (mainly due to FPO). GoI has not sold any shares over the period.
Now government has once again agreed to convert Rs 36,950 Cr ($4.4 bn) of outstanding spectrum auction dues into equity @ Rs 10/ share. This will increase GOI’s equity in the Company from current 22.6% to 48.99%.
- Vodafone Idea’s current spectrum dues are estimated at $18 billion, while its net debt stood at $25 billion as of September 2024
- As per analysts, conversion will take care of VIL’s repayments till calendar year 2027 and hence should allow it to focus and spend on operations (5G).
- Analaystys are however awaiting long-pending Rs 25,000 cr debt-raise, which is critical for the execution of its Rs 55,000 cr 3-year capex plan to arrest decline in its subscriber market share.
- Following this, Promoters’ Vodafone Plc and the Aditya Birla Group (ABG) will see their stake decline to 16.1% and 9.4%, respectively. However, they will continue to maintain the operational control.
In the absence of funding availability to VIL, government was left with no choice but to convert. Other than providing short term sentiment boost, it provides no extra funding support.
It’s back to the main promoters to continue the revival efforts.