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Vodafone Idea share price falls 9% after Kumar Mangalam Birla warns of shutting shop in absence of government relief

Following the development, shares of Vodafone Idea traded 8.89% lower, quoting at day's low of Rs 6.66 against the previous close of Rs 7.31 on BSE

twitter-logo BusinessToday.In        Last Updated: December 6, 2019  | 14:59 IST
Vodafone Idea share price falls 9% after Kumar Mangalam Birla warns of shutting shop in absence of government relief
Aditya Birla Group holds 27.66 per cent stake in the telco, while Vodafone holds 44.39 per cent

Vodafone Idea shares fell almost 9% on Friday after Aditya Birla Group Chairman Kumar Mangalam Birla said that the company would not put good money after bad and shut shop if the government did not give relief to Vodafone Idea.

Following the development, shares of Vodafone Idea traded 8.89% lower, quoting at day's low of Rs 6.66 against the previous close of Rs 7.31 on BSE.

Vodafone shares trade higher than the 20, 50 and 100-day moving averages but lower than 5 and 200-day moving averages. While the stock has climbed 2% in last week and more than 80% in a month, Vodafone shares have eroded 69% value since the beginning of the year.

Volume-wise, 173 lakh and 1,683 lakh shares changed hands on BSE and NSE, respectively. Market depth data on BSE suggests 72% selling against 28% buying.

While responding to a query about the company's course of action going forward in the absence of government relief, Chairman Kumar Mangalam Birla said," We can expect much more stimulus from the government because it's required for the sector to survive. If we weren't getting anything then I think that's the end of the story for Vodafone Idea," Birla said while speaking at the HindustanTimes Leadership Summit today.

Birla further said that it does not make sense to put good money after bad and it will be the end of the story for the company.

"If we weren't getting anything, then it's end of the road for Vodafone-Idea. We'd shut shop if we don't get relief," he added.

"There isn't a company in the world that can pay that kind of fine in three months. It doesn't work that way," he later said.

Aditya Birla Group holds 27.66 per cent stake in the telco, while Vodafone holds 44.39 per cent.

Additionally, credit ratings agency Brickworks downgraded telecom operator's rating on Non-Convertible Debentures (NCDs) on December 5 ,which led to negative sentiment around the stock today.

According to rating firm, uncertainty remains with respect to the payment of AGR dues as per Supreme Court's October 24 judgement. Brickworks revised Non-Convertible Debentures from A- rating to BBB- rating and kept the rating outlook unchanged at 'watch with negative implications'.

The downgrade is on account of the considerable impact of the AGR related liability on the financial performance of the company resulting in huge losses, erosion of net worth and deterioration in the overall risk profile of the company, Brickworks said.

Vodafone Idea crisis: 'Will shut shop if we don't get relief,' says Kumar Mangalam Birla

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