Shares of Vodafone Idea tanked over 10 per cent on the stock market after a weak opening on Tuesday.

The ailing telecom firm’s shares were trading at Rs 7.37, down 10.67 per cent on the Bombay Stock Exchange at 2:40 pm. On the National Stock Exchange (NSE), the company’s stock was down 10.30 per cent.

WHY DID VODAFONE IDEA SHARES FALL?

Shares of the company tanked today after Aditya Birla Group Chairman Kumar Mangalam Birla offered to hand over his stake in Vodafone Idea to the government or any other entity that the government may consider worthy to keep the company operational.

According to news agency PTI, Kumar Mangalam Birla made the offer in June in a letter to Cabinet Secretary Rajiv Gauba.

Official data suggests that Vodafone Idea had an adjusted gross revenue (AGR) liability of Rs 58,254 crore. The company has paid Rs 7,854.37 crore of the total AGR dues and Rs 50,399.63 crore is still outstanding.

Vodafone Idea and Bharti Airtel had approached the Supreme Court earlier this year for correction in the Department of Telecommunications’ calculation of AGR dues. However, the top court had rejected the plea for re-computation.

In the June 7 letter quoted by PTI, the billionaire businessman said investors are not willing to invest in the company in the absence of clarity on the AGR liability, an adequate moratorium on spectrum payments and floor pricing regime above the cost of service. Kumar Mangalam Birla owns approximately 27 per cent stake in Vodafone Idea.

He said that Vodafone Idea will come to an “irretrievable point of collapse” without immediate active support from the government on the three issues mentioned above.

“It is with a sense of duty towards the 27 crore Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity- public sector/government /domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” he said in the letter.

It may be noted that Vodafone Idea had received approval from its board to raise up to Rs 25,000 crore in September last year. However, the company has not been able to raise the funds till now.

Vodafone Idea’s gross debt, excluding lease liabilities, stood at Rs 1,80,310 crore as of March 31, 2021. The amount included deferred spectrum payment obligations of Rs 96,270 crore and debt from banks and financial institutions of Rs 23,080 crore apart from the AGR liability.