Yes Bank, SBI and others want Vodafone Idea to be saved, here’s why

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Yes Bank, SBI and others want Vodafone Idea to be saved, here’s why
Vodafone Idea's had a great September so far, at least in terms of its share priceBCCL
  • Vodafone Idea’s shareholders saw their wealth go up by 10% today.
  • In September alone, the telco’s share price surged by over 43%.
  • The reason behind the latest uptick could be the fact that banks want the government to provide relief to Vodafone Ideas.
The share price of Vodafone Idea spiked by over 10% on Tuesday after reports suggested that banks have asked the government to offer relief to the struggling telecom provider.

According to a Reuters report, the state-run State Bank of India led the banks, calling on the Indian government to give additional time to Vodafone Idea to clear the adjusted gross revenue (AGR) and spectrum dues, amounting to over ₹58,000 crore.

Shares of Vodafone Idea were hovering around ₹8.75 per share, up by more than 10% over the previous closing price.

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Yes Bank, SBI and others want Vodafone Idea to be saved, here’s why
Vodafone Idea share price in September so farBSE / Business Insider India / Flourish

In September alone, Vodafone Idea’s shares have jumped by more than 43% - this is over just 9 trading days.

What are the banks saying?


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According to the report, banks want the government to ease pressure on Vodafone Idea, and offer timely relief to the struggling telco.
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“All eyes are on New Delhi right now as banks are getting increasingly nervous,” the report said, quoting an unnamed banking official.

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

CompanyTotal 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

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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 The Economic Times, the telco will have to pay ₹14,000 crore annually towards spectrum payments, taking its annual liability to ₹19,000 crore.

Vodafone Idea’s debt currently stands at ₹1.9 lakh crore, according to the company’s June quarter report.

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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:

BankAmount% of loan book
IDFC First Bank₹3,240 crore2.90%
Yes Bank₹4,000 crore2.40%
IndusInd Bank₹3,500 crore1.65%
Punjab National Bank₹3,000 crore0.44%
State Bank of India₹11,000 crore0.43%
ICICI Bank₹1,700 crore0.23%
Axis Bank₹1,300 crore0.21%
HDFC Bank₹1,000 crore0.09%

Source: Nomura
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SEE ALSO:

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

Market hopes Vodafone Idea will be saved and these are the rescue options

What if Vodafone Idea dies?
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