In an interview to CNBC-TV18, Sanjay Kapoor of TMT Advisor; Nitin Soni, senior director–corporates at Fitch Ratings and stock market expert Prakash Diwan spoke at length about the shareholding at Vodafone Idea.

The telecom operator’s board of directors gave a nod to convert interest on spectrum instalments, adjusted gross revenue (AGR) dues, into equity. After the conversion, Government will hold around 35.8 percent in Vodafone Idea. Promoter shareholders will hold around 28.5 percent. This conversion, according to some market experts, will result in massive equity dilution to all existing Vodafone Idea shareholders.

First up, Kapoor said, “Looking at the practicality of things from a private company’s perspective, to give away equity to government is not a preferred option under any circumstances and even for the government who might have announced this as a package is not a preferred option to be having equity when you are not going to be running that company. So this is a marriage of convenience.”

Meanwhile, Diwan said, “The sector has positive headwinds given the situation that is emerging after this conversion by the government which means potential investors will also find it worthwhile to invest in annuity driven players like Vodafone if everything goes up well.”

Also Read: Conversion of debt to equity a huge positive for co; govt wants no role in ops: Vodafone Idea

Talking about market share, Soni said, “The network experience the consumer is facing right now with Vodafone Idea is significantly weaker than what the other telcos are offering. So because of that, they will continue to lose market share, subscribers of about 50-70 million on an annual basis.”

Also Read: Good start for Vodafone Idea but won’t be enough, says Deutsche Bank

For the entire discussion, watch the video