Vodafone Idea To MTNL: Telecom stocks surged in early morning trading on Tuesday, November 26, after the media reports emerged that the Union Cabinet had approved a waiver on bank guarantees (BGs) for telecom operators. This development shall bring significant relief to telecom companies, particularly Vodafone Idea, which owes the government around Rs 24,700 crore in bank guarantees. Indian telecom operators, including Airtel and Vodafone Idea, have collective bank guarantee obligations of over Rs 30,000 crore.

According to the media reports, the Cellular Operators Association of India (COAI) has requested the government to waive bank guarantee requirements for telecom operators for spectrum acquired prior to 2022. The government intends to enhance cash flow and facilitate increased investment in network infrastructure with this decision. The 2021 telecom reforms eliminated the bank guarantee requirement for spectrum purchased from 2022 onwards, but telecom operators still require providing BGs for deferred payments on spectrum acquired prior to 2022.

Vodafone Idea, heavily burdened with debt, had advocated for the waiver, contending that it would ease its payment burden and enable the company to secure additional credit from banks. According to the media reports, the company recently defaulted on bank guarantee payments, including a Rs 350 crore payment due in November and a Rs 4,600 crore payment that was due in September.

The news sparked a positive reaction in the market, with Vodafone Idea’s shares skyrocketing 15% to Rs 8 apiece. MTNL’s shares also rose nearly 9% to Rs 51.45 apiece. Meanwhile, Bharti Airtel’s shares saw a modest 0.30% gain, trading at Rs 1583 each.

Vodafone Idea: Financial Performance

Vodafone Idea narrowed its consolidated loss to Rs 7,176 crore in the second quarter (July-September), compared to a loss of Rs 8,737 crore in the same period last year. In the second quarter, Vodafone Idea’s revenue from operations increased to Rs 10,932 crore, marking a rise from Rs 10,716 crore in the same quarter of the previous year.

As of Q2 FY25, Vodafone Idea’s total subscriber base was 205 million, with 4G subscribers totalling 125.9 million, a marginal decline from 126.7 million in the previous quarter.

(Disclaimer: This article is for informational purposes only and should not be construed as an investment advice. Prior to making an investment, conduct thorough research and consult with your financial advisor.)

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