Vodafone Idea shares rise over 5% as govt waives bank guarantees for past spectrum auctions

Vodafone Idea shares rise over 6% as govt waives bank guarantees for past spectrum auctions

Shares of Vodafone Idea rose over 5 percent on December 30 as government waived bank guarantees for past spectrum auctions. At 11:1o am on December 30, Vodafone Idea shares were trading at Rs 7.88.

The telecom firm has been exempted from providing bank guarantees worth Rs 24,800 crore for spectrum auctions held before 2021 (2012, 2014, 2015, 2016). In a December 28 filing, the company termed the government reform as a "big relief for telecom companies".

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The company added that prior to this reform, bank guarantees aggregating to Rs 24,800 Crore were required to be provided by the company against each spectrum instalment, 13 months prior to the installment falling due for the above auctions.  But now, as per their understanding, out of all the 5 auctions, no bank guarantees will be required to be provided by the company for the 2012, 2014, 2016 and 2021 auctions. "(However) There would be a one-time partial shortfall only for the 2015 auction, where the Net Present Value (NPV) of all payments made would be less than the pro-rated value of spectrum used. We are in discussion with the DoT to determine the final amount of this partial shortfall for the 2015 auction," they noted.

The Union Cabinet had approved a proposal to waive the bank guarantee requirement last month. Moneycontrol had reported that this move would provide relief for financially stressed Vodafone Idea (Vi), expected to benefit from around Rs 24,700 crore of the Rs 33,000-crore sector-wide relief and will enable lenders to extend additional credit to the company.

The market capitalisation of the stock is Rs 55,000 crore. Its 52-week low is Rs 6.61 and 52-week high is Rs 19.18.

In Q2FY25, the teleco had reported a decline in its consolidated net loss to Rs 7,176 crore from Rs 8,737 crore in the previous fiscal. Revenue from operations for the same period had increased by 2 percent year-on-year (YoY) to Rs 10,932 crore. EBITDA (Earnings before interest, taxes, depreciation and amortisation) for the quarter increased to Rs 4550 crore against Rs 4283 crore in the previous fiscal.

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