30 Dec , 2024 By : Debdeep Gupta
Shares of Vodafone Idea rose over 5% on December 30 as the government waived bank guarantees for past spectrum auctions. At 11:1o am on December 30, Vodafone Idea shares were trading at Rs 7.88, around 5% higher.
The telecom firm has been exempted from providing bank guarantees worth Rs 24,800 crore for spectrum auctions held before 2021 (2012, 2014, 2015, 2016). In a December 28 filing, the company termed the government reform as a "big relief for telecom companies".
The company added that before this reform, bank guarantees aggregating to Rs. 24,800 Crore were required to be provided by the company against each spectrum installment, 13 months before the installment fell due for the above auctions. But now, as per their understanding, out of all the 5 auctions, no bank guarantees will be required to be provided by the company for the 2012, 2014, 2016, and 2021 auctions. "However, there would be a one-time partial shortfall only for the 2015 auction, where the Net Present Value (NPV) of all payments made would be less than the pro-rated value of the spectrum used. We are in discussion with the DoT to determine the final amount of this partial shortfall for the 2015 auction," they noted in a release.
The Union Cabinet had approved a proposal to waive the bank guarantee requirement last month. Sources had reported that this move would provide relief for financially stressed Vodafone Idea (Vi), expected to benefit from around Rs 24,700 crore of the Rs 33,000-crore sector-wide relief and will enable lenders to extend additional credit to the company.
The market capitalization of the stock is Rs 55,000 crore. Its 52-week low is Rs 6.61 and its 52-week high is Rs 19.18.
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