Vodafone Idea disclosed the Indian government will become its largest shareholder after its board approved a conversion of interest related to outstanding spectrum and adjusted gross revenue (AGR) payments into equity.

In a stock exchange filing, the operator noted the conversion will dilute existing shareholders’ interest. Vodafone Group’s holding falls from 45.1 per cent to 28.5 per cent and Aditya Birla Group’s from 26 per cent to 17.8 per cent, while the government will gain 35.8 per cent.

Vodafone Idea estimates the net present value of its interest at about INR160 billion ($2.2 billion), subject to confirmation by the Department of Telecommunications.

The move follows the government introducing a major reform package which included a four-year moratorium on spectrum payments, the option to convert interest from spectrum purchases into equity and lower bank guarantees.

Vodafone Idea is the only operator in the country to take the government up on the equity conversion offer.

In its fiscal Q2 2022 (ending 30 September 2021) the operator continued to lose subscribers, while ARPU and revenue dropped. Its net loss fell from INR72.3 billion in fiscal Q2 2021 to INR71.4 billion.