Vodafone Idea Shares
Shares of Vodafone Idea Limited jumped 15% on Monday, January 20, hitting an intraday high of ₹14. This significant price movement comes after reports that the central government may announce a partial waiver of adjusted gross revenue (AGR) dues during the Union Budget 2025.
This relief aimed at reducing liabilities may reduce the dues of Vodafone Idea and Bharti Airtel by ₹52,000 crore and ₹38,000 crore, respectively.
The proposed waiver will include penalty and interest components of AGR dues. This comes after the Supreme Court rejected the curative petition of telcos for recalculation of AGR demands in September 2024. Vodafone Idea’s total AGR liability is estimated to be ₹80,000 crore, while that of Bharti Airtel is ₹42,000 crore.
IIFL Securities noted that Vodafone Idea stock could see a short-term bounce, estimating a fair value of ₹10 per share post the AGR relief. The brokerage emphasised that while these measures could ease the debt burden, substantial revenue growth and tariff hikes are necessary for Vodafone Idea’s long-term competitiveness.
IIFL expects tariff hikes of 15% by the end of 2025, primarily targeting mid-tier and premium plans while entry-level plans will be left unaffected. The relief could improve Vodafone Idea’s debt raising capacity, allowing the company to execute its ₹50,000-55,000 crore capital expenditure programme by FY27.
The annual cash payment burden could be reduced by ₹11,500 crore for Vodafone Idea and ₹8,400 crore for Bharti Airtel. The government may also convert a part of Vodafone Idea’s dues into equity, further easing financial stress.
Vodafone Idea shares closed 14.93% higher at ₹10.47. The stock is up 36% from its follow-on public offer (FPO) price of ₹11 but down 22% from its 2024 peak of ₹19.18 per share.
Of the 22 analysts covering Vodafone Idea, 13 have recommended selling the stock, five have suggested holding it and four have given it a buy rating.
IIFL Securities expressed a positive outlook on Bharti Airtel, Indus Towers and Hexacom, citing potential sectoral benefits from AGR relief. However, they cautioned that despite the proposed measures, Vodafone Idea still faces challenges in maintaining its position as a competitive third player in the Indian telecom market.
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