Vodafone Idea Ltd Shares Surge 10% Amid Hopes of AGR Relief
Shares of Vodafone Idea Ltd. hit the 10% upper circuit in early trading on January 20, following reports that the government might consider significant relief on the Adjusted Gross Revenue (AGR) dues imposed after the Supreme Court’s 2019 verdict.
Early Session Spike
At 9:35 AM, Vodafone Idea Ltd shares were trading at Rs 10.02, up by 10% on the NSE. This surge comes as reports suggest that the Department of Telecommunications (DoT) is exploring a proposal to ease the financial burden on telecom operators like Vodafone Idea Ltd and Bharti Airtel.
Relief Plan in the Works
According to sources, the proposed relief measures could include:
- 50% Waiver on Interest
- 100% Waiver on Penalties and Interest on Penalties
If approved, this proposal could result in over Rs 1 lakh crore in relief for telecom operators. Vodafone Idea Ltd (Vi) stands to benefit the most, with potential reductions of over Rs 52,000 crore in AGR dues. Other beneficiaries include:
- Bharti Airtel: Dues reduced by nearly Rs 38,000 crore
- Tata Teleservices: Dues reduced by around Rs 14,000 crore
Key Challenges for the Government
While the relief package could ease the financial stress on telcos, it presents several challenges for government officials, including:
- The potential relinquishment of public funds
- The need for multi-level approvals
AGR Controversy: A Lingering Burden
The AGR dispute remains a major challenge for Vodafone Idea. In September 2023, the Supreme Court dismissed petitions from 19 telecom companies, including Vodafone Idea Ltd and Airtel, that sought to recalculate their AGR dues. This decision continued to weigh on Vodafone Idea Ltd financial health.
Previous Government Reforms
Last month, Vodafone Idea shares also rallied after the government announced reforms waiving bank guarantees for past spectrum auctions.
Key Details:
- The telecom company no longer needs to provide bank guarantees worth Rs 24,800 crore for spectrum auctions held before 2021.
- These guarantees were previously required 13 months before each installment was due for auctions in 2012, 2014, 2015, 2016, and 2021.
- Vodafone Idea hailed this move as a “big relief” in its December 28 filing.
The Bigger Picture
Despite the recent rally, Vodafone Idea shares remain 30% lower compared to their value 12 months ago. This decline reflects ongoing investor concerns about the company’s financial health and future prospects.
What’s Next?
If the proposed AGR relief is finalized, Vodafone Idea could gain much-needed breathing room. However, significant hurdles remain, including:
- Securing government approvals
- Improving its financial position to stay competitive
For now, investors are watching closely, hoping this potential relief will turn around the fortunes of this beleaguered telecom giant.
