Vodafone Idea Shares Surge 10% on AGR Dues Waiver News

Shares of the struggling telecom company Vodafone Idea Ltd. surged to the 10% upper circuit during early trading on January 20, following a report by Moneycontrol suggesting that the government might consider reducing a significant portion of adjusted gross revenue (AGR) dues levied on firms such as Vodafone Idea and Bharti Airtel after the Supreme Court's 2019 ruling.

At 9:35 am, Vodafone Idea's stock was trading at ₹10.02 on the NSE, reflecting a 10% increase.

According to sources, the Department of Telecommunications (DoT) has held multiple discussions with telecom operators, including Vodafone Idea, where industry players have emphasized their financial struggles.

The proposed relief package reportedly includes a 50% waiver on interest and a complete waiver of penalties and interest on penalties. If implemented, this could provide over ₹1 lakh crore in financial relief to telecom companies, with Vodafone Idea potentially receiving more than half of the benefits due to its severe financial difficulties.

Under this plan, Vodafone Idea's AGR dues could be reduced by approximately ₹52,000 crore, while Bharti Airtel might see a decrease of nearly ₹38,000 crore. Tata Teleservices could benefit from a reduction of around ₹14,000 crore.

One of the major challenges for government officials would be justifying the waiver of public funds, along with securing multiple levels of approvals, as reported by CNBC-TV18.

Vodafone Idea continues to grapple with the AGR issue. In September, the Supreme Court rejected petitions from 19 telecom firms, including Vodafone Idea and Airtel, seeking a reassessment of their AGR dues—a setback that has further strained the financially troubled company.

In December, Vodafone Idea’s shares had surged after the government removed the requirement for bank guarantees related to past spectrum auctions. The telecom provider has been relieved from submitting bank guarantees worth ₹24,800 crore for spectrum auctions conducted before 2021 (i.e., 2012, 2014, 2015, and 2016). In a filing on December 28, the company described this regulatory change as a "significant relief for telecom firms."

Previously, Vodafone Idea was required to furnish bank guarantees totaling ₹24,800 crore for each spectrum installment, 13 months ahead of its due date. However, under the new policy, the company will no longer need to provide guarantees for the spectrum acquired in the 2012, 2014, 2016, and 2021 auctions.

Despite the recent surge in stock prices, Vodafone Idea shares have declined by 30% over the past year, underscoring investor concerns about the company’s persistent financial challenges and long-term growth potential.