The Securities and Exchange Board of India (SEBI) on Thursday exempted the government from bringing an open offer to the shareholders of Vodafone Idea Limited (VIL). The exemption is given after the proposed acquisition of more than 34 percent stake in lieu of converting spectrum arrears into Equity in VIL.
SEBI’s full -time member Ashwini Bhatia said in his order, “The acquisition of shareholding by the Government of India is proposed to protect the widespread public interest in VIL.” With this change, the government’s stake in the company will increase from 22.6 percent to about 49 percent – so that the leading telecom service provider VIL will continue to serve its customer base and increase telecommunications in India.
Giving this exemption, SEBI said that at present, the Government of India has no intention of participating in the management or board of VIL and there will be no change in the control of the telecom company. In addition, such holdings will be classified as public shareholding. Last month, the government decided to convert Rs 36,950 crore of VIL’s spectrum auction outstanding into equity under the provisions of the telecom correction package of September 2021, granting a lifeline to the crisis telecom company.
In general, increasing the shareholding of the Government of India to 48.99 percent will create an open offer compulsion under the acquisition rules, but the regulator has given exemption to the government. Under the rules, institutions that have 25 percent or more stake in a listed company have to offer an open offer to shareholders.
In its order, the regulator mentioned that a large amount was to be paid by the VIL to the government, which could put a potential burden on the company’s financial position. In addition, the obligation of an open offer by the Government of India involves a large amount of withdrawal of cash.
(With agency input)
First Published – April 3, 2025 | 8:49 pm IST
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