Vodafone Idea loses 1/3rd of its m-cap in 1 month; should investors be worried?

Shares of Vodafone Idea in Monday's trade tanked over 9 per cent to day's low of Rs 8.91 per cent amid reports that the Department of Telecom (DoT) has issued notice to the beleaguered telecom company for not depositing the bank guarantee in lieu of the past spectrum auction dues. 

At the last count at around, shares of the company traded with a cut of 7 per cent or Rs 0.66 at Rs 9.14 apiece on the BSE.

As per Zee Business research inputs, talks are currently underway between the DoT and the Finance Ministry to waive of the company's bank guarantee dues. Going ahead, the company has the liability to deposit a bank guarantee in the coming months.

Reportedly, Vodafone Idea was required to deposit the guarantee starting September 20 in respect of the auction before 2022. The bank guarantee was required to be paid one year before the moratorium on AGR dues ends in September 2025.

The company last month inked a mega $3.6 billion or Rs 55,000 crore deal with Nokia, Ericsson & Samsung. The deal marks the first step towards the rollout of the company's transformative three-year capex plan of $6.6 billion (Rs 55,000 crore).

The capex programme is directed towards expanding the 4G population coverage from 1.03 billion to 1.2 billion, launching 5G in key markets and capacity expansion in line with data growth. The company has continued with its existing long-term partners Nokia and Ericsson and also onboarded Samsung as a new partner.

These contracts will allow the company to quickly capitalize on the latest equipment to offer enhanced customer experience.

Vodafone Idea share price 

Vodafone Idea in the last one month has cracked over 31 per cent, while in the past one year it has slipped over 16 per cent.

Analysts take on the stock

G. Chokkalingam, Founder & Head of Research,Equinomics believes that if government rescues by either writing off its dues from the company or opts for conversion into equity, then there is scope for optimism. Otherwise it would be difficult for the stock to recover substantially.