The government is set to own 35.8 per cent in Vodafone Idea (Vi) after the financially-stressed telco decided to convert interest on deferred spectrum and adjusted gross revenue (AGR) dues into equity.

This will create the Union government the single-largest shareholder in Vi, a joint venture between the Aditya Birla group and UK-headquartered Vodafone.

Vodafone Idea is not just teleco in which the government is picking up a stake but It would also own 9.5 per cent in Tata Teleservices (Maharashtra) Limited (TTML) through the same route, according to announcements .

The latest development implies government holding in four telcos in the country including two state-owned firms — Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).

The promoter shareholding in Vodafone Idea, which was till recently struggling to stay afloat in an extremely disruptive telecom market, will get diluted to 46.3 per cent from existing 72.5 per and the government, which had proposed a rescue plan through equity buyout as part of a telecom package last year, will not take a board seat.

The existing management of Vodafone Idea will continue to be in charge of the telco.