Debt-ridden Vodafone Idea saw its share price rise by 3.6% in Wednesday’s session, May 15, closing at ₹7.23 apiece. The boost in the stock came after the company filed a fresh petition in the Supreme Court seeking relief on AGR (Adjusted Gross Revenue) dues.
The company is requesting a waiver of over ₹30,000 crore, primarily related to penalties and interest. In its petition, Vodafone Idea argued that the government is ‘handicapped’ in providing any relief due to the binding nature of the AGR judgment. The company has also sought an urgent hearing on the matter, scheduled for May 19, CNBC TV18 reported.
Meanwhile, on May 2, the company said its board had approved an amendment to the shareholders’ agreement to enable promoters—Aditya Birla Group and Vodafone Group—to retain governance and management rights in the company, notwithstanding the government’s increased stake.
The company will convene an extraordinary general meeting on June 3 to seek shareholders’ approval for the same, according to a regulatory filing. The government had approved Vi’s proposal to convert dues worth ₹36,950 crore into the company’s equity. With this decision, the government’s stake in Vi increased to 48.99% from 22.6%.
Following the government’s increased stake in Vodafone Idea, the shareholding of the Aditya Birla Group and Vodafone Group now stands at 9.5% and 16.07%, respectively.
Despite the company’s struggle with a staggering debt level, global brokerage firm Citi remains optimistic about its prospects, particularly in light of the recent equity conversion by the government. The brokerage has maintained its ‘buy’ rating on the stock, with a target price of ₹12.
Adding to the positive momentum, credit rating agency ICRA recently upgraded Vodafone Idea’s credit rating to investment grade (BBB-) from BB+.
Vodafone Idea share price trend
The company shares have rebounded this month, gaining nearly 2% so far after ending the previous three months in the red, during which it lost 21% of its value. Vodafone Idea has recently laid out a roadmap to return to growth, including a capital expenditure plan of ₹50,000–55,000 crore over the next three years.
In its investor presentation on April 9, the company reiterated that tariff hikes and subscriber additions are essential to drive revenue growth. The telecom firm stressed that ARPU (average revenue per user) growth is critical, especially as user consumption has soared while tariffs have not kept pace.
However, the company continued to see subscriber losses, shedding 5.41 lakh users in March and reducing its total mobile user base to 20.53 crore.
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