Government of India-Backed Telecom Stock Under Rs 10 Jumps Over 18 Per Cent as Cabinet Approves Bank Guarantee Waiver for Telcom Operators
The shares of the company saw a spurt in volume by more than 1.50 times.
On Tuesday, one of the Top Gainers on BSE & NSE, shares of this telecom service provider, jumped 18.62 per cent to Rs 8.28 per share from its previous closing of Rs 6.98 per share. The stock’s 52-week high is Rs 19.15 and its 52-week low is Rs 6.60 per share. The shares of the company saw a spurt in volume by more than 1.50 times.
The trending telecom stock is Vodafone Idea Ltd
The Union Cabinet has approved a waiver of bank guarantees (BG) for telecom operators on spectrum purchased before 2022. This move brings significant relief to companies like Vodafone Idea, which owes over Rs 24,700 crore in BGs. Indian telecom operators collectively face BG obligations exceeding Rs 30,000 crore. This decision follows the 2021 Cabinet reforms, which removed the BG requirement for future spectrum purchases. By extending this relief to older spectrum holdings, the government aims to alleviate financial pressure in the telecom sector and enhance its stability.
Vodafone Idea has consistently highlighted its financial challenges, urging the government to eliminate the BG requirement. The company argued that such a waiver would facilitate additional credit from banks, providing crucial financial support. Recently, the company failed to pay a second BG of Rs 350 crore and previously missed a payment of over Rs 4,600 crore for a BG related to a 2016 spectrum auction. Vodafone Idea has raised Rs 24,000 crore through equity and is now aiming to secure another Rs 25,000 crore in loans and Rs 10,000 crore in BGs or letters of credit.
The BG issue became prominent after the Department of Telecommunications (DoT) returned all BGs in late 2021. The 2021 telecom reforms provided a four-year moratorium on spectrum fees and adjusted gross revenue (AGR) dues. Vodafone Idea expects the full impact of tariff hikes to be reflected over the next two quarters. The company plans to start 5G rollout in key geographies by Q4FY25 and aims to increase 4G population coverage to 120 crore by September 2025.
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About Vodafone Idea Ltd
Vodafone Idea Limited is an Aditya Birla Group and Vodafone Group partnership. It is amongst India’s leading telecom service providers. The company provides pan India Voice and Data services across 2G, 3G and 4G platforms. The company holds a large spectrum portfolio including mid-band 5G spectrum in 17 circles and mm-Wave 5G spectrum in 16 circles. To support the growing demand for data and voice, the Company is committed to delivering delightful customer experiences and contributing towards creating a truly ‘Digital India’ by enabling millions of citizens to connect and build a better tomorrow. The Company is developing infrastructure to introduce newer and smarter technologies, making both retail and enterprise customers future-ready with innovative offerings, conveniently accessible through an ecosystem of digital channels as well as extensive on-ground presence. The Company’s equity shares are listed on the National Stock Exchange (NSE) and the BSE in India.
The company has a market capitalization of over Rs 57,500 crore. The company's majority of stake i.e., 23.15 per cent, is owned by the Government of India (Department of Investment and Public Asset Management).
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Disclaimer: The article is for informational purposes only and not investment advice.