Vodafone Idea rallies on government bank guarantee waiver

Vodafone Idea Limited (VIL) saw a significant rise of 3.35%, bringing its stock price to Rs 7.72, after the government announced the waiver of bank guarantees for spectrum acquired in previous auctions.

The Department of Telecommunications (DoT) declared on December 27th that telecom operators would no longer need to submit financial bank guarantees for spectrum bought in auctions from 2012, 2014, 2015, 2016, and 2021, under specific conditions. This decision builds on the 2021 telecom reform package, which had already removed the necessity for bank guarantees in future spectrum auctions. The latest decision now includes past acquisitions in this benefit.

Before this waiver, VIL was obligated to maintain bank guarantees totaling approximately Rs 24,800 crore as collateral against its spectrum payments. While the requirement is now lifted for most past auctions, a small one-time shortfall may still apply for the 2015 auction. VIL is currently negotiating with the DoT to finalize the amount of this shortfall.

This move by the government showcases its ongoing support for the Indian telecom sector, aiming to foster industry growth and development.

Vodafone Idea, a joint venture between the Aditya Birla Group and the Vodafone Group, is a leading telecom provider in India. It offers voice and data services across 2G, 3G, and 4G networks nationwide and holds a significant spectrum portfolio, including key 5G bands.

In financial terms, Vodafone Idea's consolidated net loss narrowed to Rs 7,175.9 crore in Q2 FY25, compared to a net loss of Rs 8,737.9 crore in Q2 FY24. Additionally, revenue from operations increased by 2.01% year-over-year, reaching Rs 10,932.2 crore in Q2 September 2024.