Citi has reportedly maintained a 'Buy/High risk' on Vodafone Idea Ltd with a target price of Rs 13 per share, calling the recent waiver on bank guarantees (BGs) by the government as a major relief as it felt Vodafone Idea was not in a position to provide such BGs. Bank guarantees were emerging as the stumbling block in Vodafone Idea's efforts to raise debt funding, Moneycontrol cited Citi report as saying.
The development is seen as having positive implications for Indus Towers Ltd as well. Any progress on debt funding would be a key monitorable going ahead, the foreign brokerage reportedly said.
To recall, an extraordinary general meeting (EGM) will be held on Tuesday, January 7 at 4:00 pm, seeking approval of the members of the company on issue of preferential shares, up to 1,75,53,19,148 for cash at a price of Rs 11.28 per equity share aggregating up to Rs 1,980 crore promoter entities Omega Telecom Holdings Private Limited (1,13,47,51,773 shares) and Usha Martin Telematics Limited (62,05,67,375).
Vodafone Idea intends to use the subscription monies received from the proposed allottees for making payments due to Indus Towers under the terms of the master service agreements executed between the Company and Indus for the provision of passive infrastructure services.
Shares of Vodafone Idea are up 4.3 per cent in past five sessions. For 2024, the stock is down 54.41 per cent.
The telecom operator recently received a letter from the Department of Telecommunications (DoT), regarding the waiver of bank guarantees . In another development, the promoter entity Vodafone Group settled Rs 11,650 crore as part of its outstanding dues secured against its stake in the domestic telecom operator.
Prior to the recent reform, bank guarantees aggregating to Rs 24,800 Crore were required to be provided by VIL against each spectrum instalment, 13 months prior to the installment falling due for the auctions. Vodafone Idea said, as per its understanding of the terms and conditions, out of all the 5 auctions, no BGs will be required to be provided by VIL for the 2012, 2014, 2016 and 2021 auctions.