Vodafone Idea Ltd said that the Indian government would own almost 36 percent of the country's third-largest mobile operator after its board approved the conversion of dues into equity, Bloomberg reported.
The wireless carrier said in a stock exchange filing that this would lead to dilution for all the existing shareholders of the company, including its founders, leaving the Vodafone Group Plc with 28.5 percent ownership and Aditya Birla Group with around 17.8 percent ownership.
Chief Operating Officer of Mumbai-based financial services firm JST Investments, Aditya Kondawar, was quoted as saying by MoneyControl, "Vodafone Idea is a heavily indebted company. Only the AGR and spectrum dues have been converted to equity. The competition in the telecom space has heated up and Vodafone Idea has a heavy chunk of subscribers. It had 43.5 crore subscribers as of Q1FY19 which has reduced to 25.3 crore by Q2FY22. The challenge is uphill for Vodafone as it has to pay interest on its heavy debt and do CAPEX for the latest spectrum as well. Only the promoter has changed, the challenges for the company haven't."
The company’s total debt stood at Rs 1.80 trillion as of March 2021.
Vodafone’s financial health had taken a hit after Reliance Jio Infocomm Ltd triggered a price war in 2016, quickly becoming the top player.
(With inputs from Bloomberg and Money Control.)
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