The Ministry of Communications on March 29 directed Vodafone Idea (Vi) to issue shares worth ₹36,950 crore following the conversion of its outstanding spectrum auction dues into equity shares, the company disclosed on Sunday in a statement.

With that, the government will now hold 48.99% of equity from earlier 22.6% in the telco. The shares will be issued at ₹10 per share, as per reports.

This decision is part of the telecom relief package announced in September 2021 to support financially stressed telecom companies.

The Aditya Birla Group and Vodafone Group will jointly hold 46.3% of the company’s equity. Despite becoming the largest shareholder, the government has no plans of taking over Vi’s operations or appoint board members, confirming that the promoters will continue to run the company.

The decision aims to improve Vi’s financial stability by reducing its debt burden, making it more attractive to investors, as per reports.

Industry experts see this as a crucial step in ensuring a competitive telecom market in India while allowing Vi to focus on expansion and technological advancements, including 5G deployment.

Vi received the communication on March 30 and has 30 days to complete the issuance, subject to approval from authorities including Securities and Exchange Board of India (SEBI).

The Department of Telecom (DoT), in an earlier communication dated December 27, 2024, dispensed with the requirement of submission of Financial Bank Guarantees for the spectrum acquired in auction held in 2012, 2014, 2015, 2016 and 2021, subject to certain terms and conditions.

“The waiver is a clear indication of the government’s continued support to the telecom industry. It will ensure that the exposure of the banking system is utilised by telecom operators towards further proliferation of 4G and 5G networks in India," Vi said.

Prior to this reform, bank guarantees aggregating to about ₹24,800 crore were required to be provided by Vi against each spectrum instalment, 13 months prior to the instalment falling due for the above auctions, the company said in a BSE filing.

Other major players such as Bharti Airtel were also expected to gain from the decision. No bank guarantees will be required to be provided by the operator for the 2012, 2014, 2016 and 2021 auctions, Vi had said.