Vodafone Idea Ltd shares skyrocketed over 48% in intra-day trade on Wednesday on hopes that the government may announce some reprieve for the telecom sector in the AGR (adjusted gross revenue) matter following the Cabinet meeting due later in the day.
At 2:45 pm, Vodafone Idea shares were trading at Rs 4.20 apiece, up 40% from their previous close, after hitting the day’s high of Rs 4.45. Bharti Airtel Ltd shares, meanwhile, slipped in the red to trade 1.2% lower at Rs 541.55 as it seemed the government is backing a three-private player telecom market in the country.
Shares of Grasim Industries Ltd also jumped as much as 5% during the day tracking gains in Vodafone Idea. Grasim Industries holds a little over 11% stake in Vodafone Idea.
Vodafone Idea shares also got a boost after a media report said that the government is unlikely to invoke the company’s bank guarantees for now to recover AGR dues.
An Economic Times report said that officials of the telecom and finance ministries met Cabinet Secretary Rajiv Gauba on Tuesday to consider postponing other payments for telecom companies to bring relief. Invoking bank guarantees would be the precursor to termination of telecom licences, the report said, citing an official.
Another report by CNBC TV18 noted that the government relief in the AGR matter, if any, will be provided to all telecom companies and not just Vodafone Idea.
“At this point of time, it’s not clear if they will look at it but if they were to give any relief, then it could be across the industry — for Airtel, Vodafone-Idea and Tata Teleservices Limited (TTSL) as well,” the report said quoting sources.
The Supreme Court on Friday had slammed telecom companies as well as the Department of Telecom (DoT) for not completing the process of recovering AGR dues and also directed to launch contempt proceedings against network operators.
After the apex court order, Bharti Airtel paid Rs 10,000 crore on Monday to DoT as part of the AGR dues while Vodafone-Idea paid Rs 2,500 crore and promised to pay another Rs 1,000 crore before the end of the week.