11,797.90-31.5
Stock Analysis, IPO, Mutual Funds, Bonds & More

Vodafone Idea dives 39% as SC rejects AGR plea; here's what analysts say

The plea was filed by Vodafone Idea, Bharti Airtel and Tata Teleservices.

ETMarkets.com|
Last Updated: Jan 17, 2020, 03.50 PM IST
0Comments
vodafone
The judgment leaves three telcos collectively facing more than Rs 1.02 lakh crore in additional licence fees, spectrum usage charges (SUC), penalties and interest.
NEW DELHI: Shares of Vodafone Idea and Bharti Infratel tanked up to 39 per cent after the Supreme Court rejected a plea by the telecom operators to review its October 24 verdict that had widened the definition of adjusted gross revenue (AGR).

Shares of Vodafone Idea dived 39 per cent to hit a low of Rs 3.66 on BSE. Bharti Infratel plunged 10 per cent to close at Rs 218.30. However, Bharti Airtel advanced 5.47 per cent to closed at Rs 500 on hopes that it would gain market share in case of further consolidation in the industry.

Vodafone Idea pared losses after ET Now, quoting sources, said the government was open to hear telcos' suggestions to help ease of AGR payment. The stock closed 25.21 per cent lower at Rs 4.51 on BSE.

The plea was filed by Vodafone Idea, Bharti Airtel and Tata Teleservices. The SC judgement left the three telcos collectively facing more than Rs 1.02 lakh crore in additional licence fees, spectrum usage charges (SUC), penalties and interest.

“The verdict may put a severe burden on the telcos and have unconceivable repercussions, particularly against the backdrop of Vodafone Idea facing the risk of a shutdown. It may result in Rs 1.2 lakh crore debt default, large-scale job losses and subscriber churn,” said Motilal Oswal Institutional Equities.

“We, thus, believe the final outcome may not be linear and there could be a payment extension or moratorium to say the least. Irrespective of the outcome, Bharti Airtel is well prepared and, along with RJio, it appears poised for strong market share gain,” it said.

Morgan Stanley said it would be critical to see the way forward for Vodafone Idea, as there is a possibility that the telecom industry could consolidate further.

Another global brokerage, Bank of America-Merrill Lynch, reiterated its ‘buy’ on Bharti Airtel and Reliance Industries, and ‘underperform’ rating on Bharti Infratel and VIL. It said the market was expecting a favourable outcome.

The government has estimated VIL’s dues in the AGR matter to be more than Rs 53,000 crore, including over Rs 28,000 crore in licence fee, interest and penalties and the rest on spectrum usage charges. However, the company’s internal calculation pegs it at Rs 44,000 crore.

The Supreme Court has asked them to pay the dues by January 23, leaving them with barely a week’s time. The telcos have an option to file a curative petition with the apex court, as well as, seek an extension of the due date.

Edelweiss said the telecom industry might be moving towards a duopoly. It maintained its positive stance on Bharti Airtel and Reliance Jio.

Also Read

Habeas Corpus petition for Omar in SC

SC orders inventory of Sabarimala ornaments

Sabarimala review: SC not to examine it immediately

Voda Idea tells SC it can pay Rs 2,500 cr now, SC grants no relief

SC to hear in January pleas on grant of quota in promotions to SC/ST employees

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service