Vodafone Idea shares slumps 9% after govt clarifies no fresh discussion on AGR relief

Last week, a news report had suggested that the DoT has proposed “multiple relief options” to the PMO, including a fresh two-year moratorium on AGR payments, smaller annual instalments, and waivers on penalties and interest.

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Shares of Vodafone Idea is witnessing a serious bout of profit booking, down over 9 percent in early trade on August 26, taking Indus Towers' shares along with it, as investors likely offloaded positions after clarification from the Telecom Ministry on the company's AGR dues.

Minister of State for Communications Pemmasani Chandra Sekhar had told Moneycontrol on August 25 that there is no plan under consideration to extend further relief other than what has been already extended. “...we have recently converted a lot of their debt into equity. Government has done whatever we thought we could do and at this time we don’t have any discussion or plan to change other than what we have done,” the minister said.

Any additional relief for Vodafone Idea (Vi) on its adjusted gross revenue (AGR) dues will be decided collectively by the Union Cabinet, involving the Prime Minister’s Office (PMO), Finance Ministry, Telecom Minister Jyotiraditya Scindia and the Department of Telecommunications (DoT), the minister added.

Shares of Indus Tower are down 3.5 percent in early trade on August 26, but are flat on a YTD basis. Shares of Vodafone Idea are down over 15 percent on a YTD basis.

Last week, a news report had suggested that the DoT has proposed “multiple relief options” to the PMO, including a fresh two-year moratorium on AGR payments, smaller annual instalments, and waivers on penalties and interest. Asked if the PMO had received a proposal from DoT on extending relief to the operator, Sekhar replied: “not that we know of.”

On the question of survival, the minister responded, “That is not up to me to decide… every company, all the companies, are continuously reaching out for various reasons, they will also be continuously reaching. But at this time, the discussion — there is nothing that we have planned.”

Vi had previously urged DoT to treat the Rs 17,213 crore (principal calculated till FY19) as final, and waive off the entire interest and penalty on AGR dues.

Akshaya Moondra, the CEO of Vodafone Idea had told analysts during an investor call earlier this month that the company is entirely focusing on investing in the business. "...whatever capital is available to the Company, the focus is not in trying to do anything with the government holding. The focus will be in using any funding and cash generation for investments, which will give the best returns for the business."

The telecom player is engaged with banks for funding, which have started moving forward. The banks are currently looking for some clarity on the AGR front, Voda Idea has said, hence the company is engaged with the government.

"In the past, we have always seen that government has been supportive. You look at 2019 deferment of spectrum instalments, 2021 Reforms Package, 2023 conversion of government dues to equity, 2025 again, conversion of government dues to equity. Generally, these actions have happened. Generally, they happen closer to the time when it is essentially needed. Our request to the government has been that let us resolve this earlier than before the deadline of March, so that
banks get clarity and we can proceed with bank funding," Akshaya Moondra had told investors during the June quarter earnings call.