Shares of telecom stocks, particularly the cellular services and fixed line providers, hogged the spotlight during the trading session on Tuesday amid the media reports, citing sources, emerged that the government has approved a proposal to waive the bank guarantees (BG) that telecom operators were required to provide for spectrum purchases up to 2022.
This decision is expected to offer significant relief to major telecom services providing companies, which collectively owe over Rs 30,000 crore in BGs to the government. This decision is expected to benefit the embattled telecom player Vodafone Idea Ltd the most, which owes over Rs 20,000 crore to the government.
According to reports, Vodafone Idea is expected to submit BGs totalling to Rs 24,600 crore. In comparison, Reliance Jio’s annual BG requirement from previous auctions is estimated at around Rs 4,000 crore, while Airtel’s is about Rs 3,000 crore.
Amid the buzz, shares of Vodafone Idea zoomed hit the upper circuit limit of 15 per cent to Rs 8.02 on Tuesday, commanding a total market capitalization of more than Rs 55,000 crore. The scrip had settled at Rs 6.98 in the previous trading session. The stock has corrected nearly 60 per cent from its 52-week high at Rs 19.15 hit in June 2024.
On the other hand, shares of Mahanagar Telephone Nigam Ltd (MTNL) surged 8.7 per cent to Rs 51.45 during the session. Another telecom counter, Tata Teleservices (Maharashtra) soared on the similar line, rising 8.9 per cent to Rs 75.21 in the early session. However, both stocks gave up their gains partially.
Among other telecom players, Bharti Hexacom Ltd rose more than 4.42 per cent to Rs 1,380 at the early tick, while Bharti Airtel Ltd Tata Communications Ltd gained 1-1.5 per cent each. Reliance Industries, the parent company of Reliance JIo was up about half a per cent on Tuesday.
Representing private telecom firms, Cellular Operators Association of India (COAI), reached out to the DoT in August, advocating to eliminate BG requirements for auctions held before 2022. Besides this, Bharti Airtel Ltd urged the Department of Telecommunications (DoT) to ensure equal treatment for all telecom companies, regardless of their financial status.