Vodafone Idea shares surged over 5 per cent on December 30 as government waives bank guarantees for previous spectrum auctions. At 11:10 am on December 30, Vodafone Idea shares were trading at Rs 7.88.
The telecom firm has been exempted from providing bank guarantees of Rs 24,800 crore for spectrum auctions held before 2021 (2012, 2014, 2015, 2016). In a filing dated December 28, the company termed the government reform as a “major relief for telcos”.
The company said that prior to this reform, the company was required to provide bank guarantees totalling Rs 24,800 crore for each spectrum instalment 13 months prior to the instalment for the above auctions.
But now, as per his understanding, no bank guarantee will be required to be provided by the company for all the five auctions namely 2012, 2014, 2016 and 2021 auctions.
“(However) there will be a one-time partial reduction only for the 2015 auction, where the net present value (NPV) of all payments made will be less than the proportionate value of spectrum used.
We are in discussions with the Department of Telecommunications to determine the final amount of this partial reduction for the 2015 auction,” he said.
The Union Cabinet had last month approved a proposal to waive the requirement of bank guarantees. The move will provide relief to financially stressed Vodafone Idea (Vi), which is expected to gain around Rs 24,700 crore out of the sector-wide relief of Rs 33,000 crore.
The stock has a market capitalisation of Rs 55,000 crore, Moneycontrol had reported. It has a 52-week low price of Rs 6.61 and a 52-week high price of Rs 19.18. In Q2 FY25, the telecom company reported narrowing of its consolidated net loss to Rs 7,176 crore from Rs 8,737 crore last fiscal.
Revenue from operations for the same period grew 2 percent year-on-year (YoY) to Rs 10,932 crore. EBITDA (earnings before interest, tax, depreciation, and amortization) for the quarter grew to Rs 4550 crore from Rs 4283 crore last fiscal.