Vodafone Idea shares slump as government's call to pick 33% stake goes through

The government had acquired 33 percent stake in the telecom operator on conversion of the company’s dues into equity.

In a nine-page order, Sebi said the acquisition of shareholding in Vodafone Idea by the Government of India is proposed with the sole intent of saving the larger public interest.

"Moreover, the government has no intent to participate in the management or the Board of Vodafone Idea and there is going to be no change in control of the company. Further, such holding of the government shall be classified as public shareholding," Sebi said while giving the exemption from making the open offer.

The regulator underlined that Vodafone Idea owes the government a large sum of money, which could put a strain on the company's finances.

In September of last year, as part of a bailout package for the debt-ridden telecom sector, the government granted telecom operators the option of paying interest for the four years of deferment on postponed spectrum installments and AGR (adjusted gross revenue) dues by converting dues into equity.

Under the government's bailout package, Vodafone Idea chose to convert debt into stock.

The company filed an application on May 10 seeking an exemption from the open offer requirement in the case of the government acquiring a stake in the company.