Vodafone Idea (Vi), India’s third-largest telecom operator, has received approval from the Ministry of Communications to convert the company’s accrued interest of Rs 16,133 crore, adjusted gross revenue (AGR) and spectrum dues into equity.

 The development sent shares of Vodafone Idea up more than 25% on Monday morning, which boosts the company’s future. The previous close of Vi shares was at Rs 6.85. At the time of writing, it was trading at Rs 8.35 (up 21.90%). The high that Vi shares touched on Monday was Rs 8.55.

The telco can finally convert the interest dues owed on deferred payments to the government into equity. This will make the government the most significant stakeholder in the company. On Friday, Vi received confirmation from the government to do so after Aditya Birla Group (ABG) promised the government to bring in investment for the company.

With this, the government will own a 33% stake, making it the largest shareholder in the financially strained telecom joint venture between Vodafone UK and the Aditya Birla Group, owned by Kumar Mangalam Birla.

The rise in Vodafone Idea’s share price reflects positive investor sentiment towards the company after it converts dues into government equity. Vi’s stock has been hammered in the past few weeks due to its inability to raise capital and launch 5G to compete with Airtel and Jio. Vodafone Idea has been losing customers for nearly two years, and the telco’s key performance indicators need to turn green. Otherwise, Monday’s stock price gains will be reversed sooner or later.

The stock trades in the Futures and Options (F&O) segment with no circuit restrictions. Shares of the telecom service provider hit an all-time low of Rs 6.33 on January 27, 2023. About 10 million shares have changed hands, with 113 million buy orders pending on the NSE and BSE. The S&P BSE Sensex fell 0.38% to 60,610.

The development comes nearly 13 months after Vi’s board approved the interest switch. While the coalition cabinet had approved a telecom package in October 2021 that included the conversion of dues into equity, the government recently introduced a condition that Vi’s promoters must inject funds into the telecom company before any equity can be undertaken.

Meanwhile, shares of Indus Towers also surged 15% to Rs 164.80, hoping to get dues from Vi. The stock touched a two-year low of Rs 135.20 on January 27, 2023.