The Securities and Exchange Board of India (SEBI) has exempted the Central government from the obligation to make an open offer after converting Vodafone Idea’s spectrum dues into equity, according to a recent order.

In its order, SEBI’s Whole Time Member Ashwani Bhatia stated, “The acquisition of shareholding by the Government of India in VIL is proposed with the sole intent of protecting the larger public interest.”

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The SEBI order stipulates compliance with the Companies Act, 2013, and requires the government to report the acquisition to SEBI within 21 days. All disclosures must also adhere to SEBI’s insider trading and listing regulations, the SEBI order stated.

The exemption has allowed the government to increase its stake in the telecom operator from 22.60 per cent to 48.99 per cent without triggering a mandatory offer to minority shareholders. Accordingly, the government’s stake is set to rise further, after the latest conversion of Rs 36,950 crore worth of spectrum dues.

The SEBI order came after an application from the Department of Investment and Public Asset Management (DIPAM) argued that the stake increase was not for taking control but only to provide financial relief to Vodafone Idea.

The regulator noted that an open offer would impose additional financial burden on the government, defeating the very purpose of the telecom relief package.

The exemption comes as part of a broader effort to ensure Vodafone Idea’s financial stability. The company had opted to convert interest on its adjusted gross revenue (AGR) and spectrum dues into equity in 2022, leading to an initial government stake of 22.60 per cent.

According to SEBI, the transaction aligns with public interest as it helps stabilise a key telecom player without government intervention in its management. SEBI stated that similar exemptions have been granted in the past to facilitate debt restructuring of financially stressed firms.