Stocks

Vodafone Idea shares rise on hopes of dues clearance

Reuters BENGALURU | Updated on February 17, 2020 Published on February 17, 2020

Shares of loss-making Vodafone Idea rose as much as 12 per cent, after media said that the distressed Indian telecom operator would pay some of its staggering government dues of $3.9 billion on Monday, to avoid violating court orders.

On Friday, mobile carriers were ordered to pay nearly $13 billion in dues after the the Supreme Court threatened the companies and officials with contempt for failing to implement an earlier ruling.

 

On Saturday, Vodafone said it proposed making a payment in the next few days.

 

The shares of the company, which fell more than 24 per cent percent after Friday's ruling, recovered on Monday to trade up 15 per cent by mid-morning.

‘Slim hope’

“While there is a concern that Vodafone is against the wall, there is a slim hope that they will get through,” said Siddhartha Khemka, head of research at Motilal Oswal Financial Services in Mumbai.

“The Supreme Court's major contention was that there was no intent by telcos to pay the dues,” he added. “It was after that the company made a self-assessment and made an announcement on Saturday and we had the reports later.”

 

A media report said that Vodafone Idea would pay off part of the dues owed in licensing and spectrum fees on Monday.

The company and the Department of Telecommunications(DoT) did not immediately respond to emails seeking comment.

Rival Bharti Airtel Ltd said it paid ₹10,000 crore on Monday.

Risk of a duopoly

If Vodafone Idea shuts shop, the market would shape as a duopoly of Airtel and Reliance Jio, which many analysts and executives see as bad for the industry.

Vodafone Idea has said before that its ability to continue as a profitable business was contingent on the Supreme Court allowing it to discuss issues such as payment timelines with the government.

“Given the government's keenness on maintaining three private telcos, we believe the Department of Telecommunications or the Government will request the Supreme Court to negotiate AGR payments with telcos,” said analyst Vivekanand Subbaraman of research firm Ambit Capital.

Published on February 17, 2020
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