The shares of Vodafone Idea jumped more than 9 percent to hit an eight-month high on October 7, marking a rally of more than 50 percent in just nine weeks. This comes as investors continued to hope for some resolution of the AGR dues of the telecom firm which once was the Indian subsidiary of UK-based Vodafone Group Plc.
This anticipation has coincided with UK Prime Minister Keir Starmer's India visit on October 8-9 for talks with Prime Minister Modi in Mumbai. Additionally, latest government data shows that the telco's subscriber loss narrowed in the month of August.
Settlement of Dues?
On October 6, Bloomberg News had reported that the Indian government is considering a one-time settlement of its longstanding demand for billions of dollars in past-due fees from the telecom company, citing people familiar with the matter. Vodafone Idea is saddled with past dues of a joint venture that was set up by merging Vodafone Plc with Kumar Mangalam Birla’s Idea Cellular.
AGR Plea in SC
The Supreme Court on October 6 deferred the hearing of Vodafone Idea's AGR plea to October 13 after the government sought more time in the matter, to which the telecom company did not object. The case stems from the court's March 18, 2020 order, which upheld AGR dues up to FY17 as calculated by the Department of Telecommunications (DoT) and ruled out any reassessment by operators.
The DoT had raised an extra demand on AGR dues worth Rs 2,774 crore for FY18-19. The petition said that out of the total Re 9,450 crore of demand, Rs 2,774 crore pertains to post-merger entity — Idea Group and Vodafone Idea — following their August 2018 consolidation, while Rs 5,675 crore relates to the pre-merger Vodafone Group’s liabilities.
Vodafone Idea has contested the calculation, claiming that certain amounts have been added twice and need reconciliation. The company has asked for a recalculation of dues, starting from the pre-FY17 period.
Telecom Subscriber Data
Brokerage Centrum in a note has said that it expects Jio, Bharti Airtel and Vodafone Idea to report 1-2 percent Q-o-Q increase in average revenue per user (ARPU), according to news agency Reuters. The latest data on telecom subscription showed Vodafone Idea lost 3.1 lakh subscribers in August, slight lower than the 3.5 lakh customers lost in the previous month.
After the release of the data, the BSE Telecom index is up nearly 2 percent to 2,918.87.
Vodafone Idea shares jumped more than 9 percent to close at Rs 9.24 apiece.
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