The Indian government is set to become the largest shareholder in Vodafone Idea after the beleaguered operator’s board approved converting the interest on its arrears into equity.
Vodafone Idea, branded as Vi, has outstanding dues for spectrum licences as well as adjusted gross revenue. The operator estimates the net value of the interest on these dues at around INR160 billion ($2.2 billion), although this could only be confirmed by the Department of Telecommunications (DoT).
The equity conversion will grant the Indian government a 35.8% stake in Vodafone Idea by reducing the interest of the operator’s current shareholders. Vodafone Group’s holding will be slashed from 45.1% to 28.5%, while Aditya Birla Group’s will drop from 26% to 17.8%.
In October 2021, the Indian government confirmed that it would implement reforms proposed in September that were aimed at easing pressure on the telecoms sector. These included reducing the bank guarantees required for spectrum licences, suspending spectrum payments for up to four years, and allowing operators to convert interest on spectrum acquisitions into equity – although Vodafone Idea is thus far the only Indian operator to make use of the conversion option.
Vi’s fiscal second quarter results (up to 30th September 2021) confirmed falling subscriber numbers, ARPU and revenue, although its net loss declined slightly from INR72.3 billion to INR71.4 billion.