Vodafone Idea turns volatile on buzz Vodafone may exit India

Vodafone Idea rose 2.10% to Rs 3.89 on reports that Vodafone is likely to exit India amid mounting losses.

According to media reports, Vodafone is likely to exit India business as operating losses mount in the joint venture company, Vodafone-Idea, loss of lakhs of subscribers every month and a dwindling market capitalization which is hurting any fresh fund raising.

Shares of Vodafone Idea fell as much as 13.12% to hit its record low at Rs 3.31 in intraday today. Shares tumbled after CARE Ratings downgraded its rating on 'long-term bank facilities' and non-convertible debentures', citing the recent court ruling on the adjusted gross revenue (AGR) issue and extension of timelines with regard to sale of Indus Tower stake to Bharti lnfratel.

The credit rating has been revised to "credit Watch with negative implications" from previously "negative" on Long Term Bank Facilities and Non-Convertible Debentures, the filing added.

The Supreme Court on 24 October 2019 upheld the definition of AGR provided by the department of telecommunications (DoT), putting an end to a 14-year old legal battle between telecom operators and the government.

AGR is the basis on which DoT calculates levies payable by operators. Telecom operators are liable to pay around 3-5% and 8% of the AGR as spectrum usage charges and licence fees, respectively, to DoT.

Telcos argued that AGR should comprise revenue from telecom services, but DoT insisting that AGR should include all revenue earned by an operator, including that from non-core telecom operations.

CARE Ratings said that DoT can raise demand from Vodafone Idea amounting to Rs 28,309 crore. It is to be noted that the company needs to comply with the Supreme Court order within three months.

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