The government will take 33 per cent equity in Vodafone Idea after converting all interest related to payments for spectrum and other dues into equity, making it the largest shareholder in the telecom firm.
Vodafone Idea will convert dues of Rs 16,133 crore into equity and issue shares for Rs 10 each, the company said in a market filing.
Vodafone Idea is a combination of the India unit of Britain's Vodafone Group and Idea Cellular.
India's telecom sector was disrupted by the entry of billionaire Mukesh Ambani's Reliance Jio, which forced some rivals out of the market. Massive dues owed to the government compounded the telecom sector's troubles.
Vodafone Idea's board in January last year had approved the conversion of dues owed to the government into equity. The government has cleared it now.
Vodafone Idea shares closed at Rs 6.89 apiece today at the Bombay Stock Exchange, up by 1.03 per cent since previous close. The filing came after market hours.
The government decided to convert the interest dues of Vodafone Idea into equity after receiving a firm commitment from Aditya Birla Group to run the company and bring necessary investment, Telecom Minister Ashwini Vaishnaw said today.
"We had sought a firm commitment that the Aditya Birla Group would run the company and bring necessary investments. The Birlas have agreed and hence we have agreed to convert. We want India to be a three-player market plus BSNL and ensure healthy competition for consumers," Mr Vaishnaw said in a statement.