Vodafone Idea (Vi) shares saw a rise of nearly 20% 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.

The telecom company’s shares were trading at ₹8.17 apiece at 01:45 PM today. 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.

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, however, their holdings will drop to 16.1% and 9.4% respectively.

This move by the government 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.

Indus Towers Also Gains 7%

Indus Towers, a subsidiary of Airtel and a major telecom infrastructure provider, also benefited from this move. Its stock gained 7.00% after the announcement.

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 Scores

Disclaimer

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. This is for informational purposes and should not be considered as recommendations.

Kindly refer to  https://share.market/ for more details.

PhonePe Wealth Broking Private Limited is a member of NSE & BSE with SEBI Regn. No.: INZ000302639, Depository Participant of CDSL Depository with SEBI Regn. No.: IN-DP-696-2022, Research Analyst with SEBI Regn No: INH000013387, BSE RA Enlistment Number: 5887 and Mutual Fund distributor with AMFI Registration No: ARN- 187821. Member ID: BSE- 6756, NSE- 90226. 

Registration granted by SEBI, enlistment as Research Analyst and Certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors

Registered office – 2, Floor 3, Wing A, Block A, Salarpuria Softzone, Service Road, Green Glen Layout, Bellandur, Bengaluru South, Bengaluru, Karnataka – 560103, INDIA.

CIN: U65990KA2021PTC146954.