Vodafone Idea Amends Shareholders Agreement to Allow Promoters to Retain Management Rights

The board of Vodafone Idea has approved changes to its shareholders' agreement. This move allows promoters Aditya Birla Group and Vodafone Group to maintain governance and management rights, despite the government's increased stake of 48.99%. An extraordinary general meeting is scheduled for June 3 to seek shareholder approval.

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The government recently converted dues worth Rs 36,950 crore into equity, raising its stake in Vodafone Idea from 22.6% to 48.99%. Previously, in February 2023, the government had converted debt of approximately Rs 16,130 crore related to deferred AGR and spectrum instalments.

Shareholding Adjustments and Governance

Following the government's increased stake, Aditya Birla Group's shareholding stands at 9.5%, while Vodafone Group holds 16.07%. The shareholders' agreement grants governance rights as long as the promoter group holds at least 13% of the company's equity on a fully diluted basis.

To retain control, the board proposes amending the Articles of Association. This involves lowering the Qualifying Threshold from 13% to 10%, excluding shares initially issued to the government. This ensures promoters can appoint directors and manage key personnel decisions.

Debt Situation and Financial Obligations

Vodafone Idea's total debt rose by about 7% to Rs 2.17 lakh crore in December 2024, primarily due to increased statutory liabilities. In December 2023, the company reported a total debt of Rs 2,03,400 crore.

The company's investor presentation revealed that its debt includes Rs 2,14,700 crore owed to the government and Rs 2,300 crore from banks and financial institutions. These figures highlight the significant financial obligations faced by Vodafone Idea.

The board's decision aims to ensure that Aditya Birla Group and Vodafone Group retain their governance roles despite changes in shareholding structure. By adjusting the Qualifying Threshold, they aim to maintain control over key management decisions within the company.

With inputs from PTI