Apex Court Verdict To Make Vodafone Idea’s Funding An Uphill Task
- ByAyushi Ray | July 24, 2021
Apex court verdict to make Vodafone Idea’s funding an uphill task. The Supreme Court’s verdict on Friday will make fundraising an uphill task for the struggling Vodafone Idea (Vi) Ltd as potential investors do not expect the company to generate enough cash in the near future to clear its dues. Cash-starved Vodafone Idea Ltd’s stock hit the lower circuit twice on exchanges on Friday after the SC dismissed the telco’s plea to allow payment of self-assessed adjusted gross revenue (AGR) dues that are way lower than that demanded by the department of telecom (DoT). The firm’s share price closed 10% down at ₹8.36 apiece on BSE. A close source explained that the top court’s decision will make it tougher for Vodafone Idea to find an investor as the terms on which the company was planning to rope them in were based on expectations that the SC would allow the company to pay recomputed AGR dues, which would have eased the burden on the telecom service provider to a large extent.
The government has demanded ₹58,254 crore as AGR dues from Vodafone Idea, while the company has assessed this at ₹21,533 crore. Vodafone Idea has so far paid only ₹7,854 crore. “With AGR dues continuing to be so high, tariffs low, stock being beaten down, average revenue per user (ARPU) suffering, number of customers shutting and leaving Vodafone Idea’s account every month, it will now be an uphill task for the telco to convince any investor to pump capital into the firm,” said one of the persons mentioned above. “The enabling provision made by the government to allow foreign direct investment of ₹15,000 crore into Vodafone has to be used as quickly and effectively as possible. Any further delay may cause more damage to the stock and the customer base, which will make the situation far tougher,” this person said.
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