The government is now the biggest shareholder in Vodafone Idea

• India’s third biggest telco has converted its dues to the government into a stake in the company.
• As a result of this announcement, the shareholding of promoters, Vodafone Plc., and Aditya Birla Group will come down to 46% from 72% earlier.
• Government will now have a 35.8% stake in the company, worth ₹16,000 crore, making it the largest shareholder.
• Vodafone Idea had earlier opted for the four-year moratorium on spectrum and AGR dues.

Vodafone Idea announced Tuesday that it will accept the Indian government’s proposal to convert its spectrum and adjusted gross revenue (AGR) dues to equity, making the government the largest shareholder of the company. And, the implied cost of this conversion is ₹10 a share, a 32% discount on Monday’s (January 10) closing price.

With this, the Indian government will now hold a 35.8% stake in the company. The promoters – Vodafone Plc., and Aditya Birla Group – will hold 28.5% and 17.5% stake, respectively. This is down from the current shareholding of 44.39% and 27.66%, respectively.

The reason that the shares have been allotted to the government at ₹10 is that the average share price on the date (August 14, 2021) was below par value (₹10), the company noted in its filing.


“The shares may be held through the statutory undertaking of the Unit Trust of India (SUUTI) on behalf of the Government of India or by any trustee-type or other suitable arrangement,” the company said in its statement to the exchanges. SUUTI is a government investment arm that owns significant stakes in publicly listed companies like HDFC Bank, ICICI Bank, State Bank of India, among others.


According to an exchange filing by the company, the net present value of the interest owed by Vodafone Idea to the government currently stands at ₹16,000 crore.


The Department of Telecommunications had in October 2021 presented Vodafone Idea and Airtel with various options to obtain from the telecom relief package announced in September.

This included deferment of spectrum and AGR dues for four years, and converting interest on the said amount to equity shares.

Vodafone Idea opted for the moratorium with its rival Airtel following in the footsteps later.

What is AGR?

In 1999, the government and telecom operators shifted to a revenue-sharing fee model that requires them to share a part of their adjusted gross revenue (AGR) with the government as annual licence fee and spectrum usage charges.

AGR is defined in the licence agreements entered between the Department of Telecommunications (DoT) and the telecom operators.

In a notification issued in October, the DoT redefined the concept of AGR, removing all non-telecom revenue from its scope. This would then be used to compute the licence and spectrum usage charges (SUC) that telcos would have to pay to the government.

Here’s how much Vodafone Idea and Airtel owe the government in the form of AGR dues:

Company	Total AGR demand (in crore)	AGR dues paid (in crore)	Balance AGR dues (in crore)
Vodafone Idea	₹58,254	₹7,854	₹50,339
Airtel	₹43,980	₹18,004	₹25,976

Source: AGR dues case in the Supreme Court

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