Government To Acquire Vodafone Idea Stake After Share Price Stabilizes At ₹10
The Indian government is going to acquire a stake in debt-ridden struggling telecom company Vodafone Idea after the stock price of the company stabilizes at ₹10 or above.
The ailing telecom company, Vodafone Idea, has paid back the loan from IDFC First Bank. A proposal to turn debt into equity has received approval from the finance minister.
A stake in the business has been offered by Vodafone Idea once the stock price reaches Rs. 10 or higher.
Debt-ridden In order to reduce the promoters’ ownership from 74.99 percent to 50 percent, Vodafone Idea (VIL) has chosen to convert approximately Rs 16,000 crore of interest liabilities owing to the government into equity. This will amount to about a 33 percent stake in the company.
The request to buy a share in VIL had been approved by the finance ministry in July.
According to a Sebi standard, the acquisition must occur at par value. After VIL shares settle at Rs. 10 or above, DoT will approve the transaction, a government source informed PTI.
Vodafone Idea was a source of exposure for the bank in September 2021 at Rs 3240 crore (2.90% of loan book). In December 2021, the telecom company paid back Rs 1500 crore of the whole loan amount, plus Rs 110 crore in interest.
The bank’s MD and CEO, V. Vaidyanathan, acknowledged that the full amount was eventually paid out.
Sources claim that the telecom company also paid off a $2,700,000,000 debt to State Bank of India (SBI).
It’s interesting to note that the stock has not surpassed the Rs 10-mark before this time in the past three months.
Despite the positive news, Vodafone Idea ended the day on the BSE slightly lower, down nearly 1% to Rs 9.69 per share, whereas IDFC First Bank rose more than 2% to close at Rs 51.10 per share.
Market expert Sumit Bagadia stated that when discussing the target price for IDFC First Bank, the stock had made remarkable progress from its lower level over the previous three to four months.
He predicted that the stock will quickly reach its immediate target price of Rs. 55-58. He advised continuing to place money on the counter.