The Government has decided to buy a 35.8% stake in Vodafone-Idea, after the board approval of the deal. As per the approved deal, there would be a conversion of the full amount of interest related to spectrum auction instalments and AGR dues into equity.
Following the conversion, the government will become the single-largest shareholder of the company with 35.8 per cent stake and the promoter shareholders would hold 28.5 per cent (Vodafone Group) and around 17.8 per cent (Aditya Birla Group), respectively.
Vi Shares Slump On Announcement
Vodafone-Ideas troubles may be far from over, even after the respite in statutory dues many feel.
Many investors fear that there could be an attempt to merge the state-run MTNL and BSNL with Vodafone, a move that may provide many financial and legal hurdles.
Overall though, experts have viewed the development favorably, saying that this move may ensure that the telecom industry in India is not a duopoly and also increases the chance of bringing in investment.
The company was burdened with ?1.9 lakh crore of debt and faced ?58,254 crore in AGR dues. Vodafone-Ide was formed in 2017 when Aditya Birla-owned Idea Cellular and Vodafone India decided to merge their operations to be pitted against Mukesh Ambani’s Jio which shook up the telecom industry.
On Tuesday, the company’s stock opened nearly 10 per cent lower at Rs 13.40. It fell further during the afternoon session to touch its lower circuit of Rs 11.90 — a 20 per cent lower than Monday’s closing price of Rs14.85.
Negative stock reactions due to equity dilution at such a low price is expected, say industry experts and a recovery may take place once the average revenue levels increase for the company.
In the longer term, this development is being seen as bringing about stability in a chaotic telecom market in India.