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The share price of Vodafone-Idea has started rallying on hopes of some government sops with regard to bleeding telecom sector. Voda-Idea share price has managed to gain nearly 40 per cent in just two trading session this week. It is on the back of news that government is likely to come up with plan for staggered payments over 5-10 years for adjusted gross revenue (AGR) dues. Also, the company has embarked upon cost cutting measures by merging operations in the weaker telecom circles with stronger ones, new reports suggested.
Share price of Vodafone Idea, which was trading at around ₹3.2 on Monday, when Sensex and Nifty crashed by over 5 per cent, rose to touch a high of ₹4.95. It was trading at around ₹4.5 at 2 pm on the NSE and BSE.
News reports suggested that officials from the Department of Telecommunications (DoT) were ready with a note on staggered AGR payment and were awaiting a nod from attorney general. Supreme Court had set a deadline for telecom companies to clear AGR dues by December 31, 2019. The next hearing is scheduled on March 17. Reports also suggest that government may reduce some non-AGR dues such as licence fees and spectrum usage charges.
Vodafone Idea may even consider giving up spectrum in its weaker circles (by revenue market share) going forward, news reports suggested. The report highlighted that Vodafone Idea has completed integrating 17 of its 22 circles, according to its latest quarterly report.
Vodafone Idea is expected to pay ₹3,500 crore to DoT this week. The company has already paid ₹3,500 crore to the department. Vodafone Idea is of the view that their own assessment of AGR dues is ₹21,533 crore. Of this, the principal amount has been pegged at ₹6,854 crore. Though, DoT has calculated the dues at more than ₹53,000 crore.
Vodafone Idea has sought 15 years’ time to pay its AGR dues in full, after a three-year moratorium. The company has said that GST refund of ₹8,000 crore can be adjusted against the AGR liability. For Financial Year 2018-19, the gross revenues for Bharti Airtel stood at ₹49,608 crore and the company’s market-cap stood at ₹2.71 lakh crore. But despite FY 2018-19 revenues of ₹36,858 crore, the m-cap for Voda-Idea stood at ₹12,900 crore. It has just ₹2,000 crore worth of floating stock.
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