India's Vodafone Idea surges on better cash flow hopes post debt conversion

A man walks across the LED display board showing the logo of Vodafone-Idea at the ongoing India Mobile Congress 2022, at Pragati Maidan, in New Delhi, India, October 3, 2022. REUTERS/Anushree Fadnavis/Filesjumped nearly 25% on Monday after the Indian government allowed the carrier to convert the $2 billion interest on dues owed to the sovereign into equity, which could free up some cash flows in the near term.

India had in 2021 approved a bailout package for the debt-strapped telecom companies, allowing them to convert interest on deferred adjusted gross revenue owed to the government into equity. Vodafone Idea decided to avail that option and will issue 16.13 billion shares at 10 rupees a piece worth 161.33 billion rupees , the mobile carrierThe company's shares surged as much as 24.8% to 8.55 rupees, to log their best intra-day percentage gain in 16 months.

The government's nod comes after a "firm commitment" from the co-promoter Aditya Birla Group to run the company and bring necessary investment, India's telecom Minister Ashwini Vaishnaw said in a statement on Friday.

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