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Vodafone Idea Stake to Be Acquired by Government When Share Price Reaches Rs. 10 or Higher: Report

The proposal to acquire a stake in Vodafone Idea was reportedly cleared by the finance ministry in July.

Vodafone Idea Stake to Be Acquired by Government When Share Price Reaches Rs. 10 or Higher: Report

Photo Credit: Reuters

The government is set to acquire a 33 percent stake in Vodafone Idea

Highlights
  • Vodafone Idea had offered the government a stake at Rs. 10 a share
  • A SEBI norm is said to require acquisitions to take place at par value
  • Vodafone Idea promoters will have a reduced stake of 50 percent

The government will reportedly acquire a stake in telecom operator Vodafone Idea, after the company's stock price has stabilised at Rs. 10 or higher, after the telco offered a stake at that price which was cleared by the finance ministry in July. Operators in the country were previously offered the ability to pay interest for four years of deferred spectrum instalments as well as adjusted gross revenue (AGR) by converting the net present value of the interest into equity. 

According to a report by PTI citing an official source, the Department of Telecom will clear the acquisition of shares in Vodafone Idea after the company's shares stabilise at Rs. 10 or above, in accordance with a Securities and Exchange Board of India (SEBI) norm that requires acquisitions to take place at par value. 

The telecom operator had offered the government a stake at the aforementioned price, and the proposal was cleared by the finance ministry in July, as per the report.  

Vodafone Idea had opted to convert nearly Rs. 16,000 crore worth of interest liability whuch is owes to the government. After the acquisition, the telecom operator's promoters will reportedly have a 50 percent stake, down from from nearly 75 percent, while the government will have a 33 percent stake. 

However, according to the report, the government will only complete the acquisition of its stake in Vodafone Idea once the share price at Rs. 10 or higher. On Thursday, the operator's shares were trading at Rs. 9.68  — it hasn't crossed the threshold required for the acquisition since April 19, as per the report. 


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Further reading: Vodafone Idea, VIL, Vodafone, Idea
David Delima
As a writer on technology with Gadgets 360, David Delima is interested in open-source technology, cybersecurity, consumer privacy, and loves to read and write about how the Internet works. David can be contacted via email at DavidD@ndtv.com, on Twitter at @DxDavey, and Mastodon at mstdn.social/@delima. More
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