Vodafone Idea Share Price Surges as Government Converts Dues into Equity

Market Performance

Vodafone Idea Ltd. (VI) Shares surged by 10% during the opening session on April 1 following the announcement that the Central Government would convert its outstanding spectrum dues into equity. Indus Towers also witnessed a 7% increase in its stock price.

At 12:15 PM, Vodafone Idea shares were trading at Rs 8.1 on the NSE, marking a 19% increase from the previous session's close. Indus Towers' stock rose by 6.9%, reaching Rs 357.35 per share.

Government's Equity Conversion

Vodafone Idea has announced that it will issue 3,695 equity shares at Rs 10 per share, amounting to Rs 36,950 crore. This conversion will increase the Government of India's shareholding in the company from 22.6% to 48.99%. Despite this, the company's promoters will retain operational control.

According to Vodafone Idea, the issue price was determined based on the volume-weighted average price over the last 90 trading days or the 10 days before the relevant date (February 26, 2025), in compliance with the Companies Act, 2013.

Regulatory Approval and Historical Context

The Ministry of Communications approved the conversion on March 29, 2025, by the September 2021 Telecom Reforms Package. Vodafone Idea received the official order on March 30, 2025.

This marks the second instance of government debt conversion into equity for Vodafone Idea. In 2023, Rs 16,133 crore worth of debt was converted into equity at Rs 10 per share.

Financial Performance

Vodafone Idea has faced persistent financial challenges over the past year, with its stock declining by more than 50%. Despite the relief from the equity conversion, the company continues to grapple with fundraising efforts to expand its 4G and 5G networks and stabilize its subscriber base.

Conclusion

The government's decision to convert outstanding dues into equity provides Vodafone Idea with short-term financial relief. However, the company still faces significant challenges, including the need for additional funding and subscriber retention. The move also impacts Indus Towers, given its business relationship with Vodafone Idea.