The Indian government has ordered Vodafone Idea to convert all the interest it owes to the government into equity in the firm, making it by far the largest shareholder in the troubled telecom giant.

Vodafone said it has been ordered to convert capital worth about $2 billion into equity. The company “will take all necessary actions forthwith to undertake the aforesaid issuance,” Vodafone Idea disclosed (PDF) in a regulatory filing.

The move is the latest in the rescue attempts to save Vodafone Idea, a joint venture between the British telecom giant Vodafone Group and local billionaire Kumar Mangalam Birla’s conglomerate, which owed the Indian government about $2 billion for spectrum and other dues.

In 2021, the Indian government approved a rescue package for the debt-ridden telecom firms in the country and reserved rights to convert interest on them into equity at a later date. Last year, Vodafone Idea’s board approved a plan to give the Indian government a 36% stake in the company. The company reported later that the Indian government had no desire to take over the operations of the firm.

“They want three private players in the market, they want promoters to run this company,” a company executive said at the time.

India is the world’s second largest wireless market. Mukesh Ambani’s Reliance Jio and Sunil Mittal’s Bharti Airtel command the lion’s share in the country.

Vodafone Idea spent the least among the top three in the government’s auction of 5G spectrum last year. Jio spent over $11 billion to buy the offered spectrum, followed by Airtel’s over $5.4 billion expense. Vodafone Idea bought spectrum worth $2.37 billion.