The share price of telecommunication company Vodafone Idea fell by 13% on January 11, 2022, after it decided to convert statutory dues into equity that will give the Indian government an almost 36% stake in the carrier. The shares price hit at Rs. 12.90 per equity share, 11:45 AM IST.
As per the operator, the equity shares will be issued at a price of Rs. 10 per unit to the Government of India after the final confirmation by the Department of Telecommunications.
After the conversion of statutory dues into equity, the government will behold 35.8% of the equity shares of the company, leaving the rest for the promotor shareholders. Out of which, 28.5% of shares will be held by Vodaphone Group and 17.8% by Aditya Birla Group. Hence, making the government the largest shareholder of Vodafone Idea.
Last year, the government was allowed to defer the repayment of spectrum liabilities and statutory dues for the struggling telecom operators for four years. Furthermore, it gave a one-time opportunity to convert the company’s net interest into equity.
Therefore, Vodafone Idea’s board agreed upon the given option. According to the company’s estimates, the value of the interest is expected to be about ₹ 16,000 crore ($2.16 billion).