Vodafone Idea plunges 35% in two days as SC rules out AGR definition change

The stock hit a new low of Rs 3.66, down 15% on Friday, and has tanked 84% thus far in the calendar year 2019.

Shares of Vodafone Idea hit new all-time low of Rs 3.66, down 15 per cent on Friday, plunging 35 per cent in past two trading days on the BSE, after Supreme Court (SC) on Thursday rejected telecom companies’ appeal against the government’s definition of Adjusted Gross Revenue (AGR). The apex court will later decide on the timeframe for the operators to pay.

Given the past two day’s fall, thus far in the calendar year 2019, the stock of Vodafone Idea has tanked 84 per cent from level of Rs 22.77, as compared to 8 per cent rise in the S&P BSE Sensex. Currently, the company has a market capitalisation (m-cap) of Rs 11,321 crore, and has seen m-cap erosion of Rs 21,611 crore during this period. The stock had hit an all-time high of Rs 123 in April 2015.

After Thursday's judgment, the industry will need to pay these dues to the government. The total dues amount to Rs 92,641 crore (disputed actual demand is Rs 23,189 crore, levy of interest of Rs 41,650 crore, penalty of Rs 10,923 crore and interest on penalty of Rs 16,878 crore), Business Standard reported. CLICK HERE TO READ FULL REPORT

After the judgment, a statement released by Vodafone Idea said, “Clearly this judgment has significantly damaging implications for India’s telecom industry, which is already reeling under huge financial stress and is left with only four operators. Significant investment of several billion dollars has been made in creating world class networks”.

“The decision comes as a major steback to the incumbent telcos as it implies higher payments when the industry is facing price-war and intense competition. The inclusion of non-core revenues in the AGR will increase the base of adjusted gross revenue for telcos which, in turn, means higher charges for license fees and SUC,” CARE Ratings said in an emailed note.

Meanwhile, shares of Bharti Airtel were trading flat at Rs 372 on the BSE at 10:32 am; after falling 2 per cent at Rs 365 on the BSE  intra-day deals today. In comparison, the S&P BSE Sensex was down 0.12 per cent at 38,974 level.