In a recent report, rating agency Icra had said there will not be any major impact of the ongoing nationwide lockdown due to Covid-19 on telecom services
Shares of Vodafone Idea
leaped as much as 14.89 per cent to Rs 4.55 on the BSE on Thursday after its parent company, Vodafone Plc, announced that it was making an advance payment of $200 million to its India arm.
The UK-based group accelerated the payment, which was due in September 2020 under the terms of the contingent liability mechanism with Vodafone Idea, mainly to tide over any liquidity crisis arising out of the Covid-19 pandemic.
“Vodafone Group has accelerated this payment to provide Vodafone Idea
with liquidity to manage its operations, and to support the approximately 300 million Indian citizens who are Vodafone Idea
customers, as well as the thousands of Vodafone Idea employees during this phase of emergency health measures,” the group said.
The company said that following the decision by India’s Supreme Court on the definition of Adjusted Gross Revenue (AGR) in October 2019, India’s telecoms operators became liable for licence fees, penalties and interest dating back over 14 years.
Vodafone Idea has made payments to the Government of India in relation to its AGR liabilities. Under the terms of the CLM, Vodafone Group is obliged to make payments to Vodafone Idea where amounts paid pursuant to the contingent liabilities of Vodafone India exceed those of Idea Cellular. The CLM took effect at completion of the merger of Vodafone India and Idea Cellular in August 2018.
In a recent report, rating agency Icra had said there will not be any major impact of the ongoing nationwide lockdown due to Covid-19 on telecom services.
"Pressure on revenues on account of limited customer addition, along with lack of physical recharges is moderated by the increased mobile usage on account of work from the home regime as well as content viewing, in addition, to shift towards digital recharges," Icra's note said.
"Meanwhile, Voda Idea has added network capacity to cater to the rising demand for data in Delhi-NCR, amid the ongoing lockdown. The sites upgraded will facilitate better indoor network experience and enhance network speed in Delhi-NCR. The company is geared to handle the increase in demand from customers who are confined within their homes, heavily dependent on network connectivity to work, study, access essential services online, stay informed and entertained," it said.
At 10:03 AM, the stock had pared some of the gains and was up 7.83 per cent at Rs 4.27. Around 27.8 crore shares have changed hands on the BSE and NSE so far.