Vodafone Idea shares surge over 12% on hopes and prayers

Vodafone Idea shares surge over 12% on hopes and prayers
Vodafone Idea's share price today surged by 12%.BCCL
  • Shares of Vodafone Idea surged by over 12% an hour before the government’s scheduled press briefing.
  • The uptick in the share price of the company was likely triggered by hopes and prayers, since there wasn’t any actual announcement related to the telco.
  • Earlier this week, the government had reportedly committed to a three-player market, but did not give any specifics of its plan.

Beleaguered telecom player Vodafone Idea’s shares surged by over 12% as the markets anticipated tariff hikes and government assistance to help revive the company’s fortunes.

Earlier this week, a report by The Economic Times had revealed “the government is going all-out to retain a three-player market,” making the strongest case yet for the future of Vodafone Idea.

Vodafone Idea shares surge over 12% on hopes and prayers
Vodafone Idea share price.BSE / Business Insider India / Flourish

While this means that the troubled telecom player may yet survive, it needs a lot of work from all the stakeholders involved, including the British parent Vodafone Plc., Indian promoter Aditya Birla Group, the government itself and the company’s creditors.

The two promoters – Vodafone Plc., and Aditya Birla Group – have virtually given up on Vodafone Idea, stating that they will not infuse any more equity in the company, but the government wants them to do it, regardless.


Company in ‘active discussions’ to raise funds

“We are in active discussion[s] with potential investors for fund raising, to achieve our strategic intent," Vodafone Idea’s managing director and chief executive officer Ravinder Takkar said in a statement, as the company posted a net loss of ₹7,319 crore in the June quarter.

Nothing else explains the dire straits that Vodafone Idea is in as its cash balance – the company only has ₹920 crore in its kitty, while the net debt stood at a whopping ₹1.9 lakh crore.

Given that Vodafone Idea is running on fumes at the moment, it seems that the two spikes in its share prices are due to hopes and prayers of its shareholders more than anything else.

Industry experts and analysts have recommended several ways to minimise the fallout from the collapse of Vodafone Idea, including roping in its rivals Airtel and Reliance Jio as caretakers of the company’s subscribers.

The telco has already lost over 51 million subscribers since the beginning of 2020, while its rivals Airtel and Jio have together gained 83 million subscribers.


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