Vodafone Idea Shares Plunge After Government Becomes Its Largest Shareholder

Vodafone-Idea News: Government will hold around 35.8% of the total outstanding shares of the company, and the promoter shareholders would hold around 28.5 per cent (Vodafone Group) and around 17.8 per cent (Aditya Birla Group) respectively.

New Delhi: Shares of the telecom giant Vodafone-Idea (Vi) plunged as much as 17 per cent, on Tuesday, after the company’s decision to convert its outstanding interest and AGR dues to equity. The government of India will be granted the equity shares and will hold a 35.8 per cent stake in the company, making it the biggest shareholder of the firm. The decision will result in the dilution of all the shareholders, including the promoters, according to a report by BloombergQuint.

#VodafoneIdea approves conversion of AGR dues, spectrum interest into equity.

For the latest news & updates visit: https://t.co/wuNKpC2r5k pic.twitter.com/jeXlLeb3Z9

— BloombergQuint (@BloombergQuint) January 11, 2022

As of 10:30 AM, the shares of the company were trading at Rs 13, 12.46 per cent below the previous close. “the Government will hold around 35.8% of the total outstanding shares of the company, and that the promoter shareholders wuld hold around 28.5 per cent (Vodafone Group) and around 17.8 per cent (Aditya Birla Group) respectively”, the official press release by the company said.

The equity shares of the company will be issued to the government at a par value of Rs 10 per share, the press release further said. The company in October 2021, approved the deferment of payment of spectrum auction instalments and dues for AGR for four years following various rounds of negotiations with the Department of Telecommunications, a report by Economic Times said.

In the new telecom reforms introduced by the government in September 2021, the Department of Telecom provided the option, to the companies, to covert the dues in the equity shares. It said, “At the option of the Government, to convert the due amount pertaining to the said deferred payment by way of equity at the end of the Moratorium/Deferment period, guidelines for which will be finalized by the Ministry of Finance.”

The company has been struggling to attract new customers after Reliance Jio cornered a vast share of the market with attractive data packs.