(MENAFN- NewsBytes) Trouble is mounting for debt-laden Vodafone Idea (Vi) as its shares tanked as much as 24% on the Bombay Stock Exchange Thursday. This comes a day after Kumar Mangalam Birla stepped down as Vi's non-executive chairman and director and appointed Himanshu Kapania as successor. The company witnessed a sharp fall in its share price in the stock market for the third consecutive day.
In this article
- Vi's shares hit 52-week low today
- Birla had recently offered his stake to government
- Without government support, company may 'collapse': Birla
- Birla offered stake with 'sense of duty' to customers
- Government planning long-term relief package for ailing telcos
- Will government's relief package help Vodafone?
- SC had earlier rejected pleas of telecos
Market Vi's shares hit 52-week low today
Vi's share price dipped by 24% to Rs. 4.6 apiece at 10 am on Thursday. This marks a 52-week low. At the same time, more than 2.67 crore Vi shares were under selling order. The company's shares have been noted to have plunged 45% in just four days. Incidentally, it was trading at Rs. 8.35 on Friday.
Context Birla had recently offered his stake to government
Vodafone Idea has been going through severe financial distress due to its pending dues to the tune of Rs. 1.8 lakh crore and feeble operational profits. In a last-ditch effort to keep the cash-strapped company afloat, Birla had in June offered his 27.66% stake in the company to the government or any other entity that the government may consider.
Birla Without government support, company may 'collapse': Birla
In his letter to the government in June, Birla had said that due to the lack of clarity on adjusted gross revenue (AGR) liability, the moratorium on spectrum dues, and the floor pricing regime, investors are not willing to infuse money into the telecom company. He had sought immediate support from the government, saying that Vi could come to an "irretrievable point of collapse."
Quote Birla offered stake with 'sense of duty' to customers
In his letter, Birla said, "It is with a sense of duty towards the 27 crore Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity: public sector/government /domestic financial entity."
Government Government planning long-term relief package for ailing telcos
The government is planning a long-term relief package for the financially distressed telecom sector , The Economic Times recently reported. A major portion of the financial burden of telecos arises from AGR dues and spectrum charges. Reportedly, the government's relief package is likely to address these two issues, including a plan to redefine AGR to exclude 'non-telecom items' and allowing telcos to surrender unused spectrum.
Concerns Will government's relief package help Vodafone?
It is unlikely that the long-term relief package will help Vi, since the company needs immediate support with its alarming debt. The company's woes have also been compounded by weakening revenue and lack of investment. Vodafone Group CEO Nick Read has also clarified that it has no intention to pump more funds into its debt-ridden Indian joint venture.
Information SC had earlier rejected pleas of telecos
Earlier this year, Vi, Bharti Airtel, and Tata Teleservices had approached the Supreme Court , seeking the recalculation of AGR dues decided by the government. However, the SC had rejected their appeals and ordered the companies to pay their AGR dues by 2031 in 10 installments.
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