Vodafone Idea cracks nearly 13 pc after AGR verdict; Bharti Airtel rises more than 6 pc

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Shares of Vodafone Idea on Tuesday tumbled nearly 13 per cent, while those of Bharti Airtel rose more than 6 per cent after the Supreme Court granted 10 years to telecom firms for paying the AGR-related dues to the Department of Telecommunications (DoT) with certain conditions.

Vodafone Idea shares tanked 12.76 per cent to close at Rs 8.89 apiece on BSE. During the day, it plummeted 24.53 per cent to Rs 7.69.

The stock went into a tailspin after the order, erasing all its early gains.

Shares of Bharti Airtel, however, jumped 6.38 per cent to settle at Rs 546.75. During the day, it rose by 7.99 per cent to Rs 555.05.
Bharti Airtel was the top gainer in the Sensex pack.

RIL shares also gained 0.43 per cent to close at Rs 2,087.55 apiece after rising 2 per cent to Rs 2,121.75 per unit during the day.

"The Supreme Court verdict is not as beneficial to Vodafone Idea as it is to Bharti Airtel. Vodafone was looking forward for a 20-year-payment cycle which has now reduced to 10 years. Considering the high annual interest, depreciation and amortization cost the annual AGR (Adjusted Gross Revenue) dues could put further strain on the cash flows of the company," said Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities.

The Supreme Court on Tuesday granted 10 years to telecom firms such as Vodafone Idea, Bharti Airtel and Tata Teleservices for paying the AGR-related dues to the Department of Telecommunications with certain conditions.

The apex court asked telcos to pay 10 per cent of the AGR-related dues by March 31, 2021.

"The SC verdict giving a 10-year time frame for payment of AGR dues with 10 per cent upfront payment can be regarded as reasonably fair.

However, the 10-year time frame puts a question mark on the survival of Vodafone. For the stock market the verdict is mixed. Since it is positive for Bharti and RIL these two heavyweight stocks are likely to remain resilient, supporting the markets," V K Vijay Kumar, Chief Investment Strategist at Geojit Financial Services said.

Failure to pay the instalments of the dues would incur penalty, interest and contempt of court, the bench cautioned the telecom firms.