Vodafone Idea Ltd. (VI) was in the spotlight on Tuesday after the Central government approved the long-anticipated conversion of spectrum dues worth ₹36,950 crore into equity, marking a significant relief for the debt-laden telecom operator.
As part of the conversion, Vodafone Idea will issue 3,695 crore equity shares at ₹10 per share to the Government of India. This will increase the government’s stake in the company from 22.6% to 48.99%, while promoters will continue to retain operational control, the company confirmed in its exchange filing.
The stock hit its upper circuit of 10%, locking in gains at ₹7.48 on the NSE, compared to the previous close of ₹6.80. The issue price is nearly 47% higher than the last traded price, reflecting strong backing from the government. The company’s market cap currently stands at ₹534.02 billion.
This is the second time the government has converted dues into equity. In 2023, it had converted ₹16,133 crore of debt at the same ₹10 per share rate under the Telecom Reforms Package announced in September 2021.
Brokerages weigh in:
-
Citi Research reaffirmed its Buy rating and maintained a target price of ₹12, implying a 76% upside.
-
Motilal Oswal raised its target to ₹6.5 from ₹5, calling the government support a medium-term positive, though it flagged challenges such as pending fundraising, subscriber retention, and AGR dues.
Despite Tuesday’s surge, Vodafone Idea shares have lost over 50% in the past year, highlighting investor anxiety around the company’s future, especially its slow progress on 4G and 5G network expansion.
