Vodafone Idea Allots ₹36,950 Crore in Shares to Government, Centre Becomes Largest Shareholder

Vodafone Idea on April 8, 2025, announced the allotment of ₹36,950 crore worth of equity shares to the Government of India, as reported by CNBC TV18. The move marks a significant turning point for the debt-ridden telecom operator as the government now holds a 48.99% stake, becoming its largest shareholder.

The allotment involved the issuance of 3,695 crore equity shares at a face value of ₹10 each. These were issued at par value, as part of the company’s strategic debt-to-equity conversion.

Equity Conversion Under Telecom Relief Package

The equity conversion follows Vodafone Idea’s earlier disclosure on March 30, 2025, aligning with the Reforms and Support Package for the telecom sector introduced in September 2021. The shares were allotted under Section 62(4) of the Companies Act, 2013, based on directions received from the Ministry of Communications.

The Department of Investment and Public Asset Management (DIPAM) will represent the government’s interest in the company. Post-allotment, the company’s total paid-up capital has expanded to ₹1.08 lakh crore, comprising more than 10,834 crore shares.

Impact on Capital Structure

The conversion significantly changes Vodafone Idea’s ownership pattern and capital structure. The government’s entry as the largest shareholder offers substantial relief to the financially strained telco, which has been struggling with high debt and network investment constraints.

While the government has reiterated that it does not intend to interfere in the company’s management, the equity support provides Vodafone Idea with much-needed financial headroom to improve its competitiveness.

Strategic Significance for the Indian Telecom Sector

This move is seen as part of a broader effort to stabilise the Indian telecom market, which has been under stress due to price wars, regulatory liabilities, and high capital expenditure requirements. Vodafone Idea’s financial support through this equity conversion could help the operator continue its 4G expansion, plan 5G rollouts, and reduce operational challenges.

Vodafone Idea Share Price Performance

As of the end of the trading session on April 8, 2025, Vodafone Idea’s shares closed at ₹7.17, down 2.58% on the NSE. The Deliverable/Traded Quantity stood at 26.27%, and the company’s market capitalisation was recorded at ₹51,188.81 crore.

Conclusion

The government’s decision to convert spectrum dues into equity has offered Vodafone Idea a critical financial lifeline. While it alters the ownership structure, it also paves the way for the telco to stabilise and potentially reclaim market relevance. The move reflects a strong policy push to maintain the private telecom market in India, safeguarding long-term competition and consumer interests.

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