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

Shares of Vodafone Idea experienced a significant increase of 19.41%, reached BSE on Tuesday to Rs 8.15, after the government’s decision to convert the company’s spectrum payment to equity into equity, after the government’s decision to improve its financial position and improve statutory obligations.
The government’s stake in VI will be from 22.6% to 48.99%, while the holding of private promoters Vodafone PLC and Aditya Birla Group will decrease by 16.1% and 9.4% respectively, although they will maintain operational controls.
In particular, the ownership of Vodafone UK will decrease from 24.4% to 16.1%, while ABG’s stake will decrease from about 14% to 9.4%, according to company sources, who spoke to ET.
This government intervention is considered important support for a struggling telecom operator. This conversion will provide required cash flow assistance to VI after uniform action in February 2023, especially because it prepares for increased regulatory payments after ending in September.
Experts noted that VI, currently working in a loss, requires settlement of Rs 29,000 crore in government spectrum and has adjusted the gross revenue (AGR) dues in the late FY26. These responsibilities will now be reduced to Rs 11,000 crore. Starting the FY27, the requirement of annual payment will be reduced from Rs 43,000 crore to Rs 17,000 crore.
VI’s cash reserves were recorded at Rs 12,090 crore for the December quarter.
“The Ministry of Communications has decided to replace the outstanding spectrum auction arrears, in line with the reforms of September 2021 and the support package for the telecom sector, which includes the deferred outstanding dues after the termination of the Mortorium period, which is said to be in an exchange on Sunday, in equity shares issued to the Government of India.
Vodafone Idea share price analysis
City Research has maintained its purchase/high risk rating on Vodafone idea after the government’s decision to increase ownership of the government by 48.99%. The firm set a target price of Rs 12 per share, suggesting a 76% possible increase from the previous closing price.
The research firm admitted that immediate financial pressure decreases due to the government’s large stake, Vodafone views continue to face challenges in getting additional funds and developing its 4G and 5G infrastructure.
Trendlyne indicates an average target price of Rs 8 for data Vodafone Idea ShareEstimates an increase of 18% from current values. Among 22 analysts, the prevailing recommendation is for ‘selling’.
The RSI of the stock is at 35.7, indicating the state of the neutral market. The MACD reading of -0.3 is located below its center line, indicating the speed of recession.
Currently, the stock trades below all major simple moving averages, from 5-day to 200-day period.
Since the year on the year, the share price has decreased by 15% and 48% in the last 12 months. The market capitalization of the firm is currently Rs 48,618 crore.