Govt stake in Vodafone Idea: Move ensures survival of this telecom player, but who will own this company will be key, says expert
Vodafone Idea share price: Shares of Vodafone Idea bounced back on Tuesday after declining by up to 22 per cent on back of the government picking up majority stake in the company.
Shares of Vodafone Idea bounced back on Tuesday after declining by up to 22 per cent on back of the government picking up majority stake in the company. Apparently, Vodafone Idea had approved conversion of spectrum interest and government dues into equity, making the government largest stakeholder in the beleaguered company.
Vodafone Idea stocks surged over 7 per cent to Rs 12.75 per share on the BSE in Wednesday's intraday trade. On Tuesday, Vodafone Idea shares had closed with the decline of 20.88% or Rs 3.10 to Rs 11.75 per share on the BSE after the company said the government will hold about 35.8% of the total outstanding shares of the company following the conversion.
The Vodafone Idea had said that its board had approved conversion of the full amount of interest related to spectrum auction instalments and dues owed to the government for use of the airwaves into equity.
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As per the company's statement, promoter shareholders Vodafone Group would hold around 28.5% and Aditya Birla Group around 17.8%.
Talking about positive, Vipula Sharma, Director, Ratings and Head, Infrastructure Ratings, said one thing is clear the move ensures survival of this telecom company as the government gets majority stake. " Who will own this company is key. A clear promoter is essential in this sector which is still recovering and yet to achieve viable ARPUs, " he said.
Speaking about impact of this move on other telecom players, Santosh Meena, Head of Research, Swastika Investmart Ltd said there will be no such direct impact on Bharti Airtel and Reliance Jio.
He said that on the contrary both are in a strong position to outperform from here. "There is also one silver lining in this event is that the government may be more focused on reforms related to this sector as they have become major shareholders in Vodafone idea, "he added.
Earlier in October 2021, the Department of Telecommunications (DoT) had laid out various options for clearing the statutory dues. The Vodafone Idea had opted for deferring payment of spectrum auction installments & AGR dues by 4 years.
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