Vodafone Idea share reacts as govt rules out fresh relief; what investors need to know

Shares of Vodafone Idea Ltd slumped 12 per cent in Tuesday’s trade after the Ministry of Communications clarified that no fresh relief measures are under consideration for the debt-laden telecom operator.

The stock fell 12.2 per cent to hit the day’s low of Rs 6.59 on BSE over its previous close of Rs 7.40. At 12:24 am, the scrip was trading 7.43 per cent lower at Rs 6.85. The counter has declined nearly 55 per cent from its 52-week high of Rs 16.55 apiece.

The stock exchange sought clarification from Vodafone Idea on August 26. The reply is awaited.

Minister of State for Communications Chandra S Pemmasani has clarified that the government is not considering any additional relief package for Vodafone Idea, CNBC-TV18 reported.

“Whatever we wanted to do has already been done,” S Pemmasani said, referring to the government’s move in 2021 to convert nearly Rs 53,000 crore of Vodafone Idea’s dues into equity. The debt-to-equity swap gave the Centre a 49 per cent stake in the financially stressed telecom operator, making it the single-largest shareholder.

S Pemmasani told CNBC-TV18 that the future course for Vodafone Idea rests with its management. “They know how to manage. It’s up to them how they want to take it forward,” he said.

Vodafone Idea is in advanced negotiations to secure Rs 5,000 crore in debt financing, aiming to fortify its capital structure and aid its turnaround strategy, MoneyControl reported.

The funding will be channelled through Vodafone Idea Telecom Infrastructure Limited, a subsidiary managing the company's telecom and renewable energy assets. JM Financial, an investment bank, has been appointed to advise on the transaction, which is anticipated to be finalised within a fortnight, MoneyControl said, citing people directly aware of the matter.

The government became the single-largest shareholder in Vodafone Idea after converting spectrum auction dues worth Rs 36,950 crore into equity in March this year. Earlier, in 2023, it had taken up nearly 33 per cent stake in the debt-laden telecom operator against statutory dues of over Rs 16,000 crore.

Among technical indicators, the scrip is trading above its 10-day and 20-day simple moving averages (SMAs) but below 5-, 30-, 50-, 100-, 150- and 200-day SMAs.