Vodafone Idea shares jump by 24% after government approves to convert dues into equity

The shares of debt ridden Vodafone Idea rose sharply in Monday's trade after the government agreed to convert its debt into equity. The company in an exchange filing said that the Centre directed it to issue shares at a price of Rs 10 per share and a total worth of Rs 16,133.10 crore.

After the stocks of the company saw a fall of nearly 25 per cent in the last one year, the stocks on Monday went up by 24.38 per cent and hit a day high of Rs 8.57 over its previous close of Rs 6.89.

There were a total of 2,245,128 buy orders on Monday against nil sell orders, and the turnover on the counter was at Rs 57.29 with a market capitalization of Rs 26,530.17 crore.

Centre the highest stake holder

With the assignment of equity shares, the government will now own 33 per cent stake in the telecom company. This makes the government the largest stakeholder in the company. The center has made it clear that they don't want to play a managing role, nor do they have any future plans to convert Vi into a state-owned telecom.

The government's decision may help Vi clear a portion of its debt with network vendors and tower companies and add additional network capex to strengthen its 4G operation in the near term.

Vodafone Idea's dues to pay

At the end of September 2022, Vodafone Idea's dues, including those to both banks and lenders, were at Rs 15,080 crore, while the dues to vendors like tower firms and network providers were at Rs 15,030 crore. But with the government's recent move to help refinance the company, it will turn out to be vital as the company has Rs 9,600 crore in upcoming debt repayments in September this year.