Vodafone Idea Secures Lifeline: Government Converts Rs 36,950 Crore Dues Into Equity
Of this, 36,950 crore rupees of the dues accrued by Vodafone Idea (Vi) have been converted into equity by the Indian government. As a result, the stake has jumped from 23% to nearly 49%.
Vodafone Idea will now issue 369.5 crore shares at the price of Rs 10 per share. This will be close to a 47% premium to the market price of Rs 6.8 per share currently. However, even being the greatest stakeholder, the company promised that promoters will be in touch with all decision-making operations.
It was the second time that the government intervened in this form corresponding to a similar conversion where interest dues worth Rs 6,133 crore were converted into equity in February 2023. By December 2024, total debt at Vodafone Idea stood at Rs.230,000 crore. However, without conversion, the company would have paid Rs 40,000 crore every year starting September 2025.
Delicate Balance Ahead
While the government’s financial support offers Vodafone Idea some breathing space, the path ahead for the company is tough. The core issue is whether it would use this financial breather to run its business effectively and diminish outstanding debts. But, as Shenoy has pointed out, in the event the government obtains a share of 50 percent or more in subsequent conversion rounds, the company might fall under the definition of a public sector undertaking (PSU) and lose its status and control as a private company.
As of now, Vodafone Idea’s future is poised precariously on the balance as it continues to depend on the government. The strength of the telecoms’ restructuring, attraction of new investment, and ability to pay off its liabilities will be the ultimate determinant for its long-term viability and survival, becoming a permanent dependent on such taxpayer-funded bailouts.
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