VIL Shares up 10%; Govt Converts Spectrum Dues at ₹10 per Share

Vodafone Idea Ltd shares surged by 10% on March 31 as the centre decided to convert VIL's upcoming spectrum dues repayment into equity at ₹10 apiece. This was done at a premium of 46.84%, compared to its Friday’s closing of ₹6.81.

MOFSL said that equity conversion will provide temporary relief for VIL, but stabilisation of its subscriber base, long-pending debt raise, and further relief on AGR dues remain vital for VIL's long-term survival.

MOFSL said, “GoI’s continued commitment to maintaining a 3+1 market construct in the Indian telecom sector and the easing of Vi’s cashflow constraint are also positive for Indus Towers. We retain our Sell rating on VIL with a revised target of Rs 6.5 per share, while we remain Neutral on Indus Towers and would use any bounce to reduce exposure.”

The repayment of spectrum dues stand at ₹67,000 crore over FY26–28. The equity conversion is set to reduce VIL’s spectrum repayment obligations pertaining to auctions held prior to 2021 by ₹40,000 crore.

After conversion, VIL will pay ₹8000 crore in spectrum dues between the second half of FY26 and the first half of FY28. The telecom provider will also be required to pay ₹2,200 crore for spectrum auctions conducted between 2021 and 2024. According to MOFSL, VIL’s Ebitda of ₹9,000 crore should be sufficient to meet the Government of India’s (GoI) spectrum repayment obligations till the first half of FY28.

Vodafone shares hit an upper circuit of 10% at ₹7.49.

Following the conversion, the government's holding in VIL would increase to 49% from 22.6%, while VIL’s existing combined promoter stake would be reduced to 25.5% from 39.7% respectively. Public shareholding would decline to 23.8%.