Industry

Vodafone Idea tanks 39%, Bharti Airtel gains 4% as investors anticipate two-player market

Photo for representational purposes.

Photo for representational purposes.  

This comes after the Supreme Court on Thursday rejected telcos’ review plea to reconsider its decision on the adjusted gross revenue (AGR), that may force telcos to cough upto ₹1.3 lakh crore.

Shares of Vodafone Idea tanked over 39% on Friday to ₹3.66 while shares of Sunil Bharti Mittal-led Bharti Airtel gained over 4% to touch its 52-week high of ₹498.65 in a firm Mumbai market as investors anticipate a two-player market in the India telco field.

This comes after the Supreme Court on Thursday rejected telcos’ review plea to reconsider its decision on the adjusted gross revenue (AGR), that may force telcos to cough upto ₹1.3 lakh crore.

Vodafone Idea has AGR dues of about ₹44,000 crore while Bharti Airtel has AGR dues of about ₹34,000 crore.

Telcos can still file a curative petition in the apex court though it is done only to cure gross miscarriage of justice and analysts see very low chance of success.

With no relief on dues from SC, Jefferies Equity Research expect either the SC or government to provide relief in terms of payment options.

"We expect a moratorium on AGR dues for two years and staggered payments post that last over a period of time, aiding cash flows. This will be similar to the spectrum dues. We build this in our base case," said Jefferies in a research note.

According to Jeffries, even with the reliefs, AGR dues are a drag on Vodafone and will affect operations.

"The price increases are positive, but given high leverage, we expect the 4G rollout to be lower than peers, with Vodadone Idea losing market share. We retain U/P," said the Jefferies report.

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Printable version | Feb 28, 2020 2:46:01 PM | https://www.thehindu.com/business/Industry/vodafone-idea-tanks-39-bharti-airtel-gains-4-as-investors-anticipate-two-player-market/article30583062.ece

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