Shares of Vodafone Idea pared morning losses to rise 10 percent on Friday after falling 10 percent in early morning deals. On Thursday, It reported record losses of Rs 50,921 crore for the quarter ended September 30. The losses also included a provision of Rs 25,680 crore over government dues. In Q1FY20, Vodafone Idea reported a net loss of Rs 4,874 crore.
The stock rose as much as 10 percent to Rs 3.25 per share on BSE. At 10:30 am, the stock was trading 6 percent higher at 3.12. In comparison, the BSE Sensex was up 0.8 percent or 325 points at 40,611. In morning deals it had hit a low of Rs 2.6, down 10 percent.
The stock has tumbled over 26 percent in the last 2 days and 88 percent in the last 1 year. It fell
20 percent yesterday after the Department of Telecom (DoT) said companies will have to pay their Adjusted Gross Revenue (AGR) dues of roughly Rs 92,000 crore in three months as ordered by the Supreme Court (SC). Also Read: Bharti Airtel, Vodafone Idea post record losses over unpaid government dues
For Q2, its revenue rose 42 percent to Rs 11,146.4 crore during the second quarter this year. Vodafone Idea said its ability to continue as going concern is dependent on obtaining relief from the government and positive outcome of the proposed legal remedy.
It also noted that it was in active discussions with the government seeking financial relief and also in the process of filing a review petition with the Supreme Court.
As per analysts,
Vodafone Idea may see "significant" erosion in its market capitalization after it reported a massive net loss in Q2. They added that the company's lenders, especially those who have not provided for the Vodafone Idea's Q2 loss, might struggle on the exchanges in the near term.
Deepak Jasani of HDFC Securities also said that Vodafone Idea's losses may cause significant damage to its share value, while its lenders will also feel the pinch in the near term.
The telecom companies have disputed the definition of adjusted gross revenue (AGR), forming the basis for both spectrum charges and licence fee, paid to the government. According to the DoT, the AGR should include dividends, handset sales, rent and profit from the sale of scrap besides revenue from services. The apex court said that most of the things will come under the government's definition of AGR and telecom companies shall have to pay up.
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