- 01 Apr 2025
- ICICIdirect Research
THE GOVERNMENT HAS DECIDED TO CONVERT A PART OF VODAFONE IDEA’S OUTSTANDING SPECTRUM DUES INTO EQUITY
IDEA - 7 Change: -0.12 (-1.66 %)News: The government has decided to convert a part of Vodafone Idea’s outstanding spectrum dues into equity, providing financial relief to the telecom company. Total spectrum dues converted is ₹36,950 crore, against which 3,695 crore shares at issue price of ₹ 10 will be subscibed. Govt stake before conversion at 22.60% would increase to 49%. This marks the second round of debt-to-equity conversion. In 2023, the government converted ₹16,133 crore of debt into equity at ₹10 per share
View: The conversion eases payment obligations over the next 3 years by ~₹ 40000 crore and allows Vi to raise incremental debt of ~₹ 20000 crore, which is key for 5G launch and in turn arresting churn. Nonetheless, it provides a breathing space for Vi to survive and to focus on expansion and ARPU growth, which will hold key for its competitiveness. Key beneficiary would be Indus Towers which can get a leg of demand from Vi network expansion as well as stability in dues repayment by the latter.
Impact: Positive