MUMBAI - India approved the conversion of nearly $2-billion in dues owed to the government by Vodafone's local unit Vi into equity, bringing relief to the cash-strapped telco.
Vodafone has been losing money in India since Mukesh Ambani, Asia's richest man, kicked off a price war in the vast market when his conglomerate Reliance launched telecoms arm Jio in 2016.
Vi, formerly known as Vodafone Idea, first unveiled the plan in January 2022, and had been waiting for regulators and New Delhi to sign off on the announcement.
The Communications Ministry has passed an order to cover the interest owed on spectrum fees and other dues "into equity shares to be issued to the Government of India", Vi said in a statement to the market late Friday.
Vi said 161 billion rupees ($1.97-billion) would be converted into equity with shares issued at 10 rupees each.
The conversion would lead to the government holding around a third of total outstanding shares, diluting the stakes of Britain's Vodafone Group and India's Aditya Birla Group to 31.7 and 18.2 percent respectively.
The British parent company invested five billion rupees ($60-million) in the Indian unit in June, Vi had announced.
That followed an earlier cash injection of 45 billion ($547-million) by Vodafone and Aditya Birla in March.
Vi said in its September quarter earnings report that it was carrying 2.2 trillion rupees ($26.8-billion) of debt.