Shares of Vodafone Idea continued its losing streak for the second consecutive session on Friday, falling over 15 per cent to hit new all-time low of Rs 3.66 on the Bombay Stock Exchange (BSE), after Supreme Court (SC) on Thursday upheld the Central government's plea on its interpretation of Adjusted Gross Revenue (AGR). The judgement will severely affect telecom companies like Vodafone Idea, Airtel and others as they may have to pay the government a whopping Rs 1.4 lakh crore following the apex court order.
Extending previous session losses, Vodafone Idea share price tumbled as much as 15.47 per cent to hit record low of Rs 3.66 on the BSE, after opening lower at Rs 4.18 against previous close level of Rs 4.33. In the last two trading sessions, the stock has plunged as much as 35 per cent and over 80 per cent since the beginning of the calendar year 2019, in contrast to 8 per cent gain in the S&P BSE Sensex.
In a similar trend, stocks of Vodafone Idea were trading 6.90 per cent lower at Rs 4.05 after opening lower at Rs 4.15 on the National Stock Exchange (NSE). In the opening deal, the stock hit fresh low of Rs 3.65.
Commenting on Supreme Court verdict, Vodafone Idea, the country's largest telecom operator in terms of subscribers, said, "The company is extremely disappointed by the Supreme Court judgment on AGR case. The matter is 14 years old and pertains to the issue of whether revenue from other non-telecom related activities should be included in the AGR definition under the telecom licence conditions. The matter has already been through several rounds of litigation, which have been largely in favour of the operators until now."
"We will study the ruling as soon as it is available, along with our legal advisers, to determine next steps. If there are technical or procedural grounds for doing so, this could include a review application," the telecom major added.
The company further stated that this judgment has significantly damaging implications for India's telecom industry, which is already reeling under huge financial stress and is left with only four operators. Significant investment of several billion dollars has been made in creating world class networks. The order has huge impact on two private operators (Vodafone Idea and Bharti Airtel) while most of the other impacted operators have exited the sector.
Meanwhile, shares of Bharti Airtel were trading 1.37 per cent lower at Rs 367.35 apiece on the Bombay Stock Exchange. The stock hit an intraday low of Rs 364.85 after opening lower at Rs 369, against previous close level of Rs 372.45.
The telcos have urged government to look on this matter in order to find ways to mitigate the financial stress for the industry.
Edited by Chitranjan Kumar