The Indian government remains resolute in retaining its 33 percent stake in Vodafone Idea, opting against immediate divestment despite the telecom company’s recent surge in share prices. Vodafone Idea’s stock has experienced a notable increase, prompting speculation about potential windfall gains. However, sources indicate that the government is not considering full or partial divestment at this juncture.
As the largest shareholder in Vodafone Idea Limited, the government’s decision to maintain its stake is influenced by the company’s forthcoming plans to raise funds and launch 5G services while reducing debt. The government holds a 33 percent stake, followed by Aditya Birla Group and Vodafone Plc, UK.
While Vodafone Idea grapples with significant debt, nearing Rs 2.2 lakh crore, and sustained losses, its share prices have witnessed a remarkable surge of over 150 percent in the past year. The government acquired its stake at Rs 10 per share, surpassing the market price of Rs 6.85, adhering to the Companies Act’s mandate on equity purchase.
The decision to maintain the government’s stake aligns with the strategy of awaiting a credible revival plan from Vodafone Idea before contemplating any divestment. Government sources emphasize that there are currently no plans to liquidate the government’s holding in the company and that decisions on this matter will be deferred to a later date.
Vodafone Idea announced its intention to raise funds on February 22, 2024, signaling a potential multi-billion-dollar infusion. Analysts view this move as a crucial step for Vodafone Idea, which has faced challenges in retaining customers against fierce competition from Reliance Jio and Airtel.
Investors and industry observers keenly await further developments as the telecom sector undergoes dynamic shifts and strategic maneuvers.
