Following the conversion, approximately 35.8% of Vodafone Idea’s outstanding shares will belong to the Indian government. Vodafone Group holds around 28.5% of the promoter’s shares, while Aditya Birla Group holds around 17.8%.
The Vodafone Idea joint venture was formed through the merger of the Vodafone India unit and Idea Cellular in 2010, and has paid the government 78.54 billion rupees so far, but still owes about 500 billion rupees.
In an announcement on Tuesday, the board of Vodafone Idea approved converting into equity the full amount of interest owed to the government for spectrum auction instalments and dues owed for airwave use.
The company estimates that the “net present value” of the interest will be about 160 billion Indian rupees ($2.16 billion).
The Indian government will hold about 35.8% of the total outstanding Vodafone Idea shares after the conversion. Vodafone Group and Aditya Birla Group would hold approximately 28.5% and 17.8%, respectively.
Reliance Jio, owned by Mukesh Ambani, disrupted the Indian telecom market, driving some competitors out. The government is owed enormous amounts, so the sector is also facing difficulties.
The combination of Vodafone India and Idea Cellular owes the government around 500 billion rupees after paying 78.54 billion rupees in government dues.
A larger rival of Bharti Airtel confirmed on Friday that it is not converting interest on deferred payments related to spectrum and government dues into equity.