Vodafone Idea shares fall nearly 13% after AGR verdict

Shares of Vodafone Idea on Tuesday tumbled practically 13 per cent, whereas these of Bharti Airtel rose greater than 6 per cent after the Supreme Court granted 10 years to telecom corporations for paying the AGR-related dues to the Department of Telecommunications (DoT) with sure situations.

Vodafone Idea shares tanked 12.76 per cent to shut at Rs 8.89 apiece on BSE. During the day, it plummeted 24.53 per cent to Rs 7.69.

The inventory went right into a tail-spin after the order, erasing all its early features.

Shares of Bharti Airtel, nevertheless, jumped 6.38 per cent to settle at Rs 546.75. During the day, it rose by 7.99 per cent to Rs 555.05.

Bharti Airtel was the highest gainer within the Sensex pack.

RIL shares additionally gained 0.43 per cent to shut at Rs 2,087.55 apiece after rising 2 per cent to Rs 2,121.75 per unit in the course of the day.

“The Supreme Court verdict is not as beneficial to Vodafone Idea as it is to Bharti Airtel. Vodafone was looking forward for a 20-year-payment cycle which has now reduced to 10 years. Considering the high annual interest, depreciation and amortization cost the annual AGR (Adjusted Gross Revenue) dues could put further strain on the cash flows of the company,” stated Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities.

Also learn | Telecoms get 10 years to repay AGR dues: 10 issues to know in regards to the case

The Supreme Court on Tuesday granted 10 years to telecom corporations resembling Vodafone Idea, Bharti Airtel and Tata Teleservices for paying the AGR-related dues to the Department of Telecommunications with sure situations.

The apex court docket requested telcos to pay 10 per cent of the AGR-related dues by March 31, 2021.

“The SC verdict giving a 10-year time frame for payment of AGR dues with 10 per cent upfront payment can be regarded as reasonably fair. However, the 10-year time frame puts a question mark on the survival of Vodafone. For the stock market the verdict is mixed. Since it is positive for Bharti and RIL these two heavyweight stocks are likely to remain resilient, supporting the markets,” V Ok Vijay Kumar, Chief Investment Strategist at Geojit Financial Services stated.

Failure to pay the instalments of the dues would incur penalty, curiosity and contempt of court docket, the bench cautioned the telecom corporations. PTI SUM RUJ RUJ