SEBI approves government's proposal to convert Vodafone Idea telecom debt into equity

Tags: Economy/Finance

The capital market regulator Securities Exchange Board of India (SEBI) has approved the central government’s proposal to convert around $1.92 billion telecom dues of Vodafone Idea to equity shares.

In September 2021 the government of India announced a relief package for the telecom sector so that they can pay back the due they owe to the government of India after a Supreme Court judgement of 2019. 

Under the package the telecom companies, Reliance Industries' Jio, Bharti Airtel  and Vodafone Idea were given an option to convert their dues into equity shares and issue it to the Government of India. Jio and Airtel opted to pay back the dues to the government but Vodafone opted to convert its dues into equity shares.

The package was primarily for Vodafone Idea which was on the verge of bankruptcy and the government did not want the telecom sector to be dominated by two companies.

Under the deal the government stake in Vodafone Idea will be around 35.8% of the total outstanding shares of the Vodafone-Idea Company, while the promoters Vodafone and Aditya Birla Group would hold around 28.5% and around 17.8% stake in the company, respectively.

The government intends to sell the share of the company when Vodafone Idea becomes profitable.

Vodafone Idea 

It is a joint venture of Vodafone (United Kingdom) and Aditya Birla Group.

It has the third largest mobile telecommunication network in India. 

Headquarters: Gandhinagar, Gujarat 

Corporate Headquarters: Mumbai 

Chairman: Ravinder Takkar

Chief Executive Officer: Akshay Moondra