Vodafone Idea Shares Surge 9% Amid $3.6 Billion Network Expansion Deal

Vodafone Share price surge 9% On September 23, 2024, following the announcement of a significant $3.6 billion deal with Nokia, Ericsson, and Samsung to expand its 4G and 5G networks. This contract is part of Vodafone Idea’s three-year capital expenditure plan to improve network capacity and coverage, particularly in 5G technology​.

Additionally, global brokerage firms like Nomura and UBS have upgraded their ratings of Vodafone Idea, seeing potential upside despite the company’s financial struggles. These upgrades come in light of the company’s Adjusted Gross Revenue (AGR) liabilities, which total over Rs 70,000 crore. The Supreme Court recently rejected Vodafone Idea’s petition for relief on these dues, leading to a sharp fall in its stock earlier in the month​.

While investors reacted positively to the network expansion news, the ongoing AGR liabilities and the need for substantial fundraising remain significant concerns, contributing to continued stock volatility​

Vodafone Idea Share Price Performance – September 23, 2024

Today, Vodafone Idea’s share price showed a notable movement in the market. The stock opened at ₹11.35, reached a high of ₹11.71, and dipped to a low of ₹10.73. By the market close, the share price settled at ₹10.83, reflecting a 3.34% gain compared to the previous close​.

This performance comes amid increased trading volume, signaling investor interest and market volatility. The 52-week price range for Vodafone Idea spans from ₹9.79 to ₹19.15, showing the stock’s potential fluctuation over the past year​(

While Vodafone Idea’s stock climbed today, broader indices like the Nifty and Sensex also experienced gains, rising by 0.57% and 0.45%, respectively

---

Adjusted Gross Revenue (AGR) dues case

Adjusted Gross Revenue (AGR) dues case involving Vodafone Idea stems from a long-standing legal dispute between Indian telecom operators and the Department of Telecommunications (DoT) regarding the definition of AGR, a key metric used to calculate license fees and spectrum usage charges owed by telecom companies to the government.

Background of the AGR Case:

1. AGR Definition Dispute: The conflict dates back to the early 2000s, when telecom companies argued that AGR should include only revenue from core telecom services. However, the DoT maintained that AGR should also include non-core revenues such as rent, dividend, interest, and profit from the sale of assets.
2. Supreme Court Judgment (2019): In October 2019, the Supreme Court of India upheld the DoT’s definition of AGR, ruling that telecom companies, including Vodafone Idea, owed vast sums in unpaid dues. This decision led to massive financial liabilities for the companies. Vodafone Idea was one of the worst affected, with its dues pegged at approximately ₹58,000 crore.
3. Impact on Vodafone Idea: Vodafone Idea’s AGR dues ballooned to over ₹70,000 crore, including penalties and interest. This liability added severe financial strain to the already struggling company, which was dealing with fierce competition, falling revenues, and massive debt.
4. Payment and Financial Strain: Vodafone Idea made part-payments toward the dues but was still under pressure to clear the rest. The company struggled to raise funds and sought relief from the government to spread payments over an extended period. The Supreme Court, however, mandated that the dues must be paid within a set timeframe, exacerbating the telecom firm’s financial difficulties.
5. Recent Developments (2024): In 2024, Vodafone Idea sought a recalculation of its AGR dues, hoping to lower the amount owed. However, in September 2024, the Supreme Court dismissed the company’s plea, maintaining that the dues should be paid as calculated earlier​.

Related Article

NTPC Green Energy IPO Review

BSE Share price surge 16% today, further gains possible?