The Securities and Exchange Board of India (SEBI) has granted the central government an exemption from making an open offer after converting Vodafone Idea’s spectrum dues into equity. This move allows the government to increase its stake in the struggling telecom operator from 22.60% to 48.99% without triggering the mandatory offer to minority shareholders, as typically required under SEBI’s Takeover Regulations.
This exemption came in response to a request from the Department of Investment and Public Asset Management (DIPAM), which clarified that the stake hike was not intended to gain control over the company but rather to provide much-needed financial relief. SEBI acknowledged that enforcing an open offer would place an additional financial burden on the government, undermining the objective of the telecom relief package.
Under SEBI’s Takeover Regulations, 2011, any entity acquiring 25% or more in a listed company must make an open offer to public shareholders. However, in this instance, SEBI deemed the exemption necessary as part of a broader effort to ensure Vodafone Idea’s financial stability. The telecom operator had earlier converted interest on its adjusted gross revenue (AGR) and spectrum dues into equity in 2022, which had resulted in the government acquiring a 22.60% stake at the time.
With the latest conversion of ₹36,950 crore worth of spectrum dues, the government’s shareholding will rise significantly. SEBI emphasized that the transaction is in the public interest, helping to stabilize one of India’s major telecom players without requiring government involvement in its day-to-day operations or management. The regulator also noted that such exemptions have precedent and have been allowed in similar cases to support debt restructuring for financially distressed companies.
