Vodafone Idea shares up 19% as government raises stake to 48.99%

Vodafone Idea's shares experienced a significant increase of 19.41%, reaching Rs 8.15 on the BSE on Tuesday, following the government's decision to convert Rs 36,950 crore of the company's spectrum payment dues into equity, thereby improving its financial position and reducing statutory obligations.
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The government's stake in Vi will increase to 48.99% from 22.6%, whilst the holdings of private promoters Vodafone Plc and Aditya Birla Group will decrease to 16.1% and 9.4% respectively, although they will maintain operational control.
Specifically, Vodafone UK's ownership will reduce from 24.4% to 16.1%, whilst ABG's stake will decrease from approximately 14% to 9.4%, according to company sources who spoke to ET.
This governmental intervention is regarded as crucial support for the struggling telecommunications operator. This conversion, the second following a similar action in February 2023, will provide essential cash flow assistance to Vi, particularly as it prepares for increased regulatory payments after the moratorium expires in September.
Experts note that Vi, currently operating at a loss, needs to settle Rs 29,000 crore in government spectrum and adjusted gross revenue (AGR) dues in the latter half of FY26. These obligations will now decrease to Rs 11,000 crore. Starting FY27, the annual payment requirement will reduce to Rs 17,000 crore from Rs 43,000 crore.
Vi's cash reserves for the December quarter were recorded at Rs 12,090 crore.
"The ministry of communications, in line with the September 2021 Reforms and Support Package for the Telecom Sector, has decided to convert the outstanding spectrum auction dues, including deferred dues repayable after expiry of the moratorium period, into equity shares to be issued to the Government of India," Vi stated in an exchange filing late on Sunday.
Vodafone Idea Share Price Analysis
Citi Research has maintained its buy/high risk rating on Vodafone Idea after the government's decision to increase its ownership to 48.99%. The firm set a target price of Rs 12 per share, suggesting a 76% potential increase from the last closing price.
The research firm acknowledged that whilst the government's larger stake alleviates immediate financial pressure, Vodafone Idea continues to face challenges in securing additional funding and developing its 4G and 5G infrastructure.
Trendlyne data indicates an average target price of Rs 8 for Vodafone idea shares, projecting an 18% increase from current values. Among 22 analysts, the prevalent recommendation is to 'Sell'.
The stock's RSI stands at 35.7, indicating neutral market conditions. The MACD reading of -0.3, positioned below its centre line, signals bearish momentum.
Currently, the stock trades below all major Simple Moving Averages, ranging from 5-day to 200-day periods.
The share price has decreased by 15% since the year began and 48% over the previous 12 months. The firm's market capitalisation currently stands at Rs 48,618 crore.