Vodafone Idea’s stock experienced a sharp decline on Friday, falling over 5% to reach a 52-week low, extending a downward trend that began after the company’s struggles with its financial obligations became more pronounced. The share price plummeted to Rs 9.79 on the National Stock Exchange (NSE), marking a significant loss for investors. However, the stock later rebounded slightly, trading at Rs 10.33 around midday, down 0.5%.
The steep decline in Vodafone Idea’s share price follows a recent verdict by India’s Supreme Court regarding Adjusted Gross Revenue (AGR) calculations, which proved detrimental to the already debt-laden telecom operator. Over the past two days, Vodafone Idea’s stock has seen a staggering drop of more than 24%, reflecting investor concerns stemming from the court’s decision.
On Thursday, the Supreme Court rejected a curative petition filed by Vodafone Idea and several other telecom companies, which sought to challenge the AGR ruling. This ruling had mandated the inclusion of non-telecom revenue in the AGR used for calculating government license fees and spectrum usage charges. The court’s dismissal of the telecom companies’ pleas has raised alarms about their financial viability, particularly for Vodafone Idea.
The legal troubles date back to a 2019 Supreme Court ruling, which ordered telecom companies, including Vodafone India and Bharti Airtel, to pay Rs 92,000 crore within a three-month window. Subsequently, in September 2020, the court allowed these dues to be paid over a ten-year period, mandating that 10% of the total amount be settled by March 31 each year. However, the ongoing disputes regarding the AGR calculations and payment timelines have left these companies in a precarious financial situation.
The Supreme Court’s recent decisions highlight the significant pressures facing Vodafone Idea, which has been struggling to maintain its market position amid intense competition and escalating debts.
Despite the troubles at Vodafone Idea, broader domestic equity indices showed some resilience on Friday. Following a rally in global markets after the US Federal Reserve’s decision to cut interest rates, the 30-share BSE Sensex surpassed 84,000 points, while the NSE Nifty index rose by over 1% to reach 25,600 points around 10:45 am. This overall market uptick provided a contrasting backdrop to the declines seen in individual stocks like Vodafone Idea.
The steep fall in Vodafone Idea’s stock price underscores the significant challenges the telecom company faces in light of the recent Supreme Court ruling on AGR. As the company grapples with mounting financial pressures and regulatory hurdles, investors remain on edge, uncertain of the path forward for this critical player in India’s telecom sector. The repercussions of these legal challenges could shape the future landscape of the industry, influencing both market sentiment and competitive dynamics in the coming months.