Telecom firm Vodafone Idea share price zoomed over 10 per cent to ₹8.04 apiece in Monday’s trading session after Government of India (GoI) increased its stake from 22.60 per cent to 48.99 per cent by converting a portion of the company’s spectrum payment dues into equity shares valued at ₹36,950 crore.
Vodafone Idea share price has been trading in green from past five sessions by rallying over 12.92 per cent.
What does it mean for Vodafone Idea?
GoI’s move is anticipated to lower the telecom company’s statutory liabilities by that amount, enhancing its commercial viability and helping to avoid a duopoly in the industry dominated by Jio and Bharti Airtel.
Vodafone UK’s shareholding in Vi decreased to approximately 16.1% from around 24.4% prior to the transaction, while the Aditya Birla Group’s stake reduced to 9.4% from just over the current 14%.
Previously, in February 2023, the government converted Vi’s outstanding dues of around ₹16,130 crore—comprising interest from deferred AGR (adjusted gross revenue) and spectrum payments—into equity.
Vodafone Idea‘s (Vi) debt rose by approximately 7% to ₹2.17 lakh crore in the December 2024 quarter, primarily due to an increase in statutory liabilities, the company stated earlier this month. In comparison, the total debt stood at ₹2,03,400 crore in the December 2023 quarter.
Prior to the government’s acquisition, the ₹2.17 lakh crore debt included ₹2,14,700 crore in dues payable to the government and ₹2,300 crore in borrowings from banks and financial institutions.
Should you buy or sell?
Brokerage firm Citi has maintained its target price of ₹12 for the stock, suggesting a potential upside of approximately 67 per cent from the previous session’s closing value.
Citi maintained a positive outlook on Vodafone Idea following the government’s conversion of ₹3,700 crore in spectrum dues into equity, which significantly increased its stake in the telecom company. The brokerage reiterated that Vodafone Idea continues to be a ‘high-risk’ investment.
