Why are Vodafone Idea shares down by 12% in today?

Synopsis: Vodafone Idea’s shares fell 12% after the Supreme Court clarified that AGR relief applies only to the company and is limited to dues till FY 2016-17, heightening investor concerns over its financial strain and outlook.

This is one of the leading telecom service providers in India and is engaged in the business of Mobility and Long Distance services, trading of handsets and data cards is now in the focus after Supreme Court delivered a written order explaining that the relief on AGR dues

With market capitalization of Rs. 93,717 cr, the shares of Vodafone Idea Ltd are currently trading at Rs. 8.7 per share, decreasing 12% in today’s market, making a low of Rs. 8.21, from its previous close of Rs. 9.36 per share.

News

Vodafone Idea’s shares have fallen today after the Supreme Court delivered a written order explaining that the relief on AGR dues is limited in scope and that it concerns only Vodafone Idea and not the whole telecom sector.

The order confines the AGR relief to additional dues raised up to FY 2016-17 and is particular to Vodafone Idea due to the government’s 49% stake in the company. The limited extent of the relief extinguished market optimism that the burden of dues would be broadly eased across the telecom firms.

Investors disliked the news that it implies Vodafone Idea is still struggling with the financial strain caused by the AGR dues, which is adding to the pressure resulting from the debt servicing and capex requirements, especially for the 5G rollout that the company is undertaking. The share price has fallen sharply, which indicates that the market is very concerned about the company’s future. This decline has been attributed to the lack of support from the government and the resulting funding difficulties.

About​‍​‌‍​‍‌​‍​‌‍​‍‌ AGR

AGR (Adjusted Gross Revenue) is a crucial measure that reflects India’s telecom revenue base. It is the revenue on which telecom operators in India pay license fees and spectrum usage charges to the government. The calculation starts with the gross revenue of the telecom company (which means the mobile services, the data, and other related sources), and then, some minor deductions are made (like the interconnection charges and the roaming payouts.).

About the company

Vodafone Idea Limited (Vi) is one of the leading telecom operators in India. In 2018, the company was created by merging Vodafone India and Idea Cellular. Vi is the provider of mobile voice, data, and digital services all over India. The brand name used for services is Vi. Vodafone Idea, with its large subscriber base, was financially troubled mostly because of the fierce competition in the industry, the company’s heavy debt, and its significant liabilities resulting from AGR dues of the government. The company has decided to focus on extending its network coverage, improving 4G coverage, and getting ready for the future 5G rollout to revive its market share and consolidate its financial ​‍​‌‍​‍‌​‍​‌‍​‍‌position.

Sales of the company slightly increased from Rs. 11,014 cr in Q4FY25 to Rs. 11,022 cr in Q1FY26. Operating profit declined to Rs. 4,612 cr from Rs. 4,660 cr. Net loss declined from Rs. 7166 cr to Rs. 6,608 cr over the same period.

Written by Manideep Appana

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