BackVodafone Idea surges 48% on hopes of a revival
In past three months, Vodafone Idea has shed over 31%Company's board will see how to pay off AGR dues
PremiumMumbai: Shares of Vodafone Idea gained as much as 48% on Wednesday, a day after chairman Kumar Mangalam Birla met government officials on issues pertaining to adjusted gross revenue (AGR) dues.
The telco paid ₹2,500 crore towards its AGR dues on Monday and will pay another ₹1,000 crore by the end of this week.
Today, the stock closed at ₹4.21 apiece, up nearly 39% from previous close. Peer Bharti Airtel fell 0.6% to ₹544.50. In the last three months, Vodafone Idea has shed over 31%, while Bharti Airtel has gained 23%.
Vodafone Idea was the worst hit by the Supreme Court's order last week that directed telcos to pay up AGR dues before the next hearing on 17 March. In a sign of relief, reports indicate, the government may not invoke the company's bank guarantees.
On Monday, the company had said, “The board will take further stock of the situation to see how additional payments can be made." It owes about ₹50,000 crore to the Department of Telecommunications (DoT), according to government estimates.
Bank guarantees of 16 telcos listed in the Supreme Court order of 24 October work out to ₹37,641 crore. Many of these companies have either shut shop, sold their business or are in the bankruptcy court.
Bharti Airtel on Monday paid ₹10,000 crore to the Centre as part payment of its AGR dues. The telecom operator owes the government ₹35,500 crore in AGR dues.
Tata Teleservices, which had sold its mobile business to Airtel, has paid ₹2,197 crore to against estimated dues of around ₹14,000 crore. However, sources close to the company said the Tatas had made the full and final payment. Reliance Jio has paid ₹195 crore towards its AGR dues.
With that, the government has so far got ₹14,892 crore in AGR dues from telecom companies, making up for just 10% of the total outstanding amount.
Analysts believe that the large amount of spectrum dues may push the government to take a lenient stance.
“VIL approaching the NCLT may not be a workable solution, considering spectrum trading rules that saddle the buyer with the seller’s liabilities, and VIL’s liabilities far exceed the company’s value. We reiterate our stance that the Rs. 0.9 trillion spectrum dues from VIL would push the government towards leniency, to prevent a VIL collapse," said an IIFL Securities report.
Separately, Reserve Bank of India (RBI) Governor Shaktikanta Das in an interview to PTI said the central bank was "very closely monitoring" the fallout of the crisis on lenders.
Union Finance Minister Nirmala Sitharaman on Monday said that telecom department has been actively engaging with companies that have been directed by the Supreme Court to pay off more than ₹1 trillion in AGR dues.
After a 14-year-long legal battle, the SC in October upheld the government’s broader definition of revenue on which it calculates levies on telecom operators. Vodafone Idea, Bharti Airtel and Tata Teleservices Ltd last month filed modification pleas seeking more time to pay AGR-related dues, which the apex court has agreed to hear.
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