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Shares of Vodafone Idea fell sharply for the third consecutive day as trouble mounts for the debt-laden telecom firm.

At 10 am, Vodafone Idea (VI) stock was down over 23 per cent at Rs 4.62 per share on the Bombay Stock Exchange. Vodafone Idea shares lost significant value over the past three trading sessions and its market capitalisation has depleted sharply.

The sharp drop in VI’s stock price comes a day after Kumar Mangalam Birla stepped down as the non-executive chairman and director of the distressed telecom firm. The development was confirmed by the company.

Himanshu Kapania, a nominee of the Aditya Birla Group, has now been appointed as the non-executive chairman of VI, added the company.

The development comes at a time when the telecom firm is going through a period of acute financial stress. With pending dues to the tune of Rs 1.8 lakh crore and weakened operational profit, the telecom company faces an existential crisis.

To make matters worse, the company has been unable to raise funding as investors remain uncertain about the company’s future.

VODAFONE IDEA’S FUTURE UNCERTAIN

In view of the situation, Kumar Mangalam Birla had written a letter to the government in June, offering to hand over his stake in the ailing telecom firm to the government or any other entity that the government may consider.

He said investors are not willing to invest in the telecom company as there is no clarity on the AGR liability, moratorium on spectrum payments and floor pricing regime above the cost of service. It may be noted that he owns just over 27 per cent stake in the company.

In the letter, the billionaire businessman highlighted that Vodafone Idea will come to an “irretrievable point of collapse” without immediate active support from the government.

“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 added.

However, a recent report indicated that the government is planning to come out with a relief package, but Vodafone Idea’s proposal is unlikely to be considered.

It may be noted that Vodafone Idea is in need of immediate support and the long-term relief package likely to be announced may not benefit the debt-laden telco in the near term.

A major portion of Vodafone Idea’s debt arises from adjusted gross revenue (AGR) and spectrum charge dues.

VI along with Airtel and Tata Teleservices had appealed in Supreme Court earlier this year for recalculation of AGR dues determined by the Department of Telecommunication. All three firms had cited erroneous calculations in their respective pleas.

The top court rejected the appeals, making it clear that the AGR dues have to be paid by the telecom firms by March 31, 2031, in 10 instalments.

Vodafone Idea has clearly said it is not generating enough revenue nor has it managed to raise capital to clear dues. Vodafone Group CEO Nick Read reiterated that the UK-based company will not infuse more funds in its debt-ridden telecom joint venture in India.

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India today

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