Vodafone Idea, one of India’s leading telecom companies, is on the verge of becoming a Public Sector Undertaking (PSU). The government has approved the conversion of the company’s spectrum dues into equity shares, and the Government of India will become the largest shareholder in the company.
Government Approval and Equity Conversion
The government has agreed to convert Vodafone Idea’s outstanding spectrum dues into equity shares. Following this move, the government’s stake in the company will increase from the current 22.6% to 48.99%. The telecom giant announced that it will issue shares to the government at a rate of ₹10 per share, which is a 47% premium over the previous closing price.
This decision has sparked a surge in Vodafone Idea’s stock prices, with a significant 20% rise recorded on April 1, 2025.
Impact on Small Shareholders
As per the latest shareholding information as of March 2024, Vodafone Idea boasts of having nearly 58.34 lakh retail investors, and these investors hold about 7.63% of the shares in the company. These retail investors, whose investment is below ₹2 lakh each, are now worried as to how their holding will be affected by the government’s decision.
Market Reactions and Future Outlook
Brokerage Citi has had a ‘Buy’ rating on the stock at a target of ₹12. At the same time, Motilal Oswal has changed its rating to ₹6.5 from ₹5 as a possible difficulty in financing operational costs and debt servicing. Nomura has reduced its target price from ₹12 to ₹10, exercising caution in light of uncertainties.
Analysts anticipate a gradual stabilisation in user base by FY26, though the ability of the company to restructure debt is a key factor.
The news is a key milestone for Vodafone Idea, but little shareholders need to remain vigilant as the company goes through its financial restructuring. The next few months will be decisive as the telecom giant tries to hold on to its market share while tackling its debt burden
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