Debt-ridden telco Vodafone Idea (Vi’s) shares saw a rise of nearly 20% and closed at ₹8.10 apiece on April 1, 2025, following the government’s decision to convert ₹36,950 crore of outstanding spectrum dues into equity.

This move increased the government’s stake in the company from 22.6% to 48.99%, making it the dominant shareholder. Moreover, it reduced Vodafone Idea’s statutory liabilities, supporting its financial viability.

Government’s Move: Converting Debt into Equity

As part of the telecom sector relief package announced in September 2021, the government has been assisting Vodafone Idea in managing its massive debt burden. The latest step involves converting ₹36,950 crore of unpaid spectrum dues into equity, reinforcing the government’s commitment to keeping Vi afloat and ensuring continued competition in the telecom sector.

With this conversion, Vi will issue 3,695 crore new equity shares to the government at a face value of ₹10 per share.

Despite the government becoming the largest shareholder, the company’s operational control will remain with its promoters, Vodafone Group and the Aditya Birla Group, who currently hold stakes of 14.76% and 22.56%, respectively.

Vodafone Idea’s Stock Performance Post Announcement

Following the announcement, Vodafone Idea’s stock jumped around 20% to peak at ₹8.56 per share. The surge was fueled by investor optimism that the equity conversion would improve Vi’s financial stability, allowing it to focus on expanding its 4G services and accelerating its delayed 5G rollout.

While the company still faces significant challenges, such as high debt and stiff competition from market leaders like Reliance Jio and Bharti Airtel, this development provides short-term relief and boosts investor confidence.

Indus Towers Also Gains 7%

Indus Towers, a subsidiary of Airtel and a major telecom infrastructure provider, also benefited from this move. Its stock surged 7.95% to ₹360.90 per share on the NSE.

Investors reacted positively, expecting that Vodafone Idea’s improved financial standing would enable it to clear its dues to Indus Towers. The telecom infrastructure provider has been facing payment delays from Vodafone Idea, leading to concerns about its revenue and cash flow.

Let’s take a look at its Factor Analysis scores: 

Indus Towers Factor Analysis Score

Impact on Vodafone Idea’s Future

This government intervention comes at a crucial time for Vodafone Idea, which has been struggling under a massive debt burden. As of December 2024, the company’s total outstanding debt, including bank loans and spectrum liabilities, stood at over ₹2.27 lakh crore.

To strengthen its financial position, Vodafone Idea also conducted India’s largest follow-on public offer (FPO) of ₹18,000 crore in April 2024. Although the FPO was subscribed more than 3.3 times, the retail investor participation was lower than expected.

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