MUMBAI: Will Vodafone Idea (VI) soon become a public sector undertaking (PSU), even as the government is actively working to reduce its majority stake in several of its public sector undertakings to raise much-needed funds?
With the latest conversion of dues into equity, the government’s stake in Vodafone Idea has risen from 22.6 per cent to 48.99 per cent, bringing the company just over 1% away from being classified as a public sector entity.
Meanwhile, private promoters Vodafone and Aditya Birla Group (ABG) will see their stakes drop to 16.1 per cent and 9.4 per cent, respectively, though they will retain operational control for now.
In the mantime, Vodafone Idea shares surged nearly 19 per cent to close at Rs8.10 after the government converted Rs36,950 crore of dues into equity, raising its stake in the struggling telco close to to 49 per cent.
This could be just the beginning. The government may soon need to step in to help Vodafone Idea again, potentially becoming the majority shareholder. While the recent equity conversion offers some relief, Vodafone Idea still faces significant cash flow constraints. The adjusted gross revenue (AGR) dues of approximately R16,500 crore, due by March 31, 2026, remain a major hurdle.
Privatisation vs bailout of pvt firms
The government’s growing stake in Vodafone Idea stands in stark contrast to its efforts to privatise public sector enterprises. The unexpected turn of events has made the government the largest shareholder in the telecom company, with its stake now at 48.99 per cent.
This development raises questions about the government’s role in the private sector, signaling a shift in the telecom landscape. The shift in ownership came about as the government converted Vodafone Idea’s overdue dues, especially related to spectrum payments, into equity to prevent the company’s collapse.
This intervention began in 2021 when the government introduced reforms to aid struggling telecom operators. Vodafone Idea was one of the primary beneficiaries of this policy shift.
Timeline
In February 2023, the government converted Rs16,133 crore of Vodafone Idea’s interest dues into equity at Rs10 per share, taking the government stake to 22.6 per cent. On March 29, 2025, the Ministry of Communications approved the conversion of Rs36,950 crore in spectrum dues into equity, raising the government’s stake to 48.99 per cent.
While controversial, with concerns raised about taxpayer money being used to support a private company, the government’s intervention has been seen as necessary to stabilise the telecom sector, which is integral to national infrastructure and communication services.
With the government now holding a controlling stake, it finds itself in a unique position to influence Vodafone Idea’s future, particularly in terms of financial strategy and long-term viability.
