Vodafone Idea falls after reports that government hasn’t discussed proposal for a telecom relief package

• Vodafone Idea’s shares registered a decline after scaling a day’s high of nearly 10% earlier on Wednesday.
• Its rival, Airtel, also witnessed a decline in its share price after reports suggested that the Indian government did not discuss the proposal for a telecom relief package.
• Vodafone Idea’s shares have rallied over 18% in the last one month, on $4.

Shares of Vodafone Idea plunged from the day’s high as reports trickled in that the Indian government did not discuss any proposal for the highly anticipated telecom relief package.

$4 have rallied by over 18% in the last one month and that rally went up as high as 31% during the first half of trade on Wednesday, before plummeting later in the day. As of 2:00 p.m., Vodafone Idea was down by over 3%, whereas it was up by nearly 10% early in the day.


The much awaited telecom relief package has been one of the reasons behind the recent rally in Vodafone Idea’s shares. There were rumours that the government has planned to offer a 4-year moratorium on spectrum and adjusted gross revenue (AGR) dues, which was the primary trigger behind Vodafone Idea’s 10% rally earlier today.

Now, a $4 report claimed that the Indian government has not taken up discussions on the telecom relief package today.

Shares of Vodafone Idea’s rival, Airtel, were down by 0.44% as of 2:00 p.m., while Vodafone Idea desperately needs the relief package, Airtel would also benefit from any relief measures as it has exposure to the AGR liability.

Here’s how much Vodafone Idea and Airtel owe the government in the form of AGR dues:

Company	Total AGR demand (in crore)	AGR dues paid (in crore)	Balance AGR dues (in crore)
Vodafone Idea	₹58,254	₹7,854	₹50,339
Airtel	₹43,980	₹18,004	₹25,976

Source: AGR dues case in the Supreme Court

Vodafone Idea also pays approximately ₹5,000 crore per year towards licence fee and spectrum usage charges. Additionally, according to a report by $4, the telco will have to pay ₹14,000 crore annually towards spectrum payments, taking its annual liability to ₹19,000 crore.

Nothing explains the telco’s dire situation as much as its balance sheet does – Vodafone Idea had ₹920 crore in cash and cash equivalents at the end of June this year, while its debt ballooned to ₹1.9 lakh crore.

While banks and financial institutions, which have lent money to the telco don’t face any immediate threat of default, things may not remain the same for long.

Banks’ exposure to Vodafone Idea:

Bank	Amount	% of loan book
IDFC First Bank	₹3,240 crore	2.90%
Yes Bank	₹4,000 crore	2.40%
IndusInd Bank	₹3,500 crore	1.65%
Punjab National Bank	₹3,000 crore	0.44%
State Bank of India	₹11,000 crore	0.43%
ICICI Bank	₹1,700 crore	0.23%
Axis Bank	₹1,300 crore	0.21%
HDFC Bank	₹1,000 crore	0.09%

Source: Nomura

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