According to a recent order from the Securities and Exchange Board of India (SEBI), the Central government is no longer required to make an open offer after converting Vodafone Idea's spectrum dues into equity.
In the order, SEBI's Whole Time Member Ashwani Bhatia stated, "The acquisition of shareholding by the Government of India in VIL is proposed with the sole intent of protecting the larger public interest."
The SEBI order requires the government to comply with the Companies Act of 2013 and report the acquisition to SEBI within 21 days. The SEBI order stated that all disclosures must also comply with the SEBI's insider trading and listing regulations.
The exemption allowed the government to increase its stake in the telecom operator from 22.60 percent to 48.99 percent without having to make a mandatory offer to minority shareholders. As a result of the recent conversion of Rs 36,950 crore in spectrum dues, the government's stake is expected to grow even further.
The SEBI order followed an application from the Department of Investment and Public Asset Management (DIPAM), which argued that the stake increase was not intended to take control but rather to provide financial relief to Vodafone Idea.
The regulator stated that an open offer would place an additional financial burden on the government, defeating the purpose of the telecom relief package.
The exemption is part of a larger effort to maintain Vodafone Idea's financial stability. The company had decided to convert interest on its adjusted gross revenue (AGR) and spectrum dues into equity in 2022, resulting in an initial government stake of 22.60 percent.
According to SEBI, the transaction serves the public interest by stabilising a key telecom player without requiring government intervention in its management. SEBI stated that similar exemptions have previously been granted to help financially stressed firms restructure their debt.
