Government has the largest stake in Vodafone-Idea – Know what will happen to 58 lakh small investors?

The government is now going to become the largest shareholder for debt-ridden telecom company Vodafone Idea. The company has decided to convert spectrum dues into equity, after which the government’s stake will reach 48.99%, which was earlier 22.6%.

What will be the impact on small investors?

Vodafone Idea will issue new shares at ₹ 10 per share, which is 32% less than last Thursday’s closing price. As of last Thursday, the company’s shares closed at ₹ 6.8, which is 38% less than its FPO price of ₹ 11 per share last year.

As of March 2024, the company had 36.18 lakh retail investors holding 3.7%, but this number increased to 58.34 lakh by December 2024 and their stake increased to 7.63%.

The share of domestic mutual funds also increased from 2.06% in March 2024 to 3.66% in December 2024, although no fund has a stake of more than 1%.

Vodafone Idea’s future plans

The company has recently launched 5G service in Mumbai and is planning to expand to other cities soon. Due to the stock market holiday on Monday, the impact of this big development will be seen in Tuesday’s trading.

The company will soon release the shareholding details for the March 2025 quarter, which will make it clear whether small investors are still in it or have exited.

Vodafone Idea shares have fallen 10% in the last one month and have fallen 64% since its 2024 high of ₹ 19.18. Now it remains to be seen how much the company will benefit from the increased stake of the government and 5G expansion and whether investors’ confidence remains intact or not.