Vodafone Idea share gains 51% in 3 days; board to discuss fundraising plan today

Shares of Vodafone Idea extended gains for the third consecutive session on Friday and hit a fresh 52-week high of Rs 13.45 on BSE, ahead of the board meeting to consider raising capital.

Earlier on Tuesday, the telco informed stock exchanges that "a meeting of the board of directors of the company is scheduled to be held on September 4, 2020, to consider and evaluate any and all proposals for raising of funds in one or more tranches by way of a public issue, preferential allotment, private placement, including a qualified institutions placement or through any other permissible mode and/or a combination thereof as may be considered appropriate, by way of issue of equity shares or by way of issue of any instruments or securities".

Vodafone Idea stock opened at Rs 11.31, also its intraday low and later touched an intraday as well as a new 52-week high of Rs 13.45. This was a rise of 7% against the last close of Rs 12.56 on the BSE.

The stock of the telecom services provider has risen 51.29% in the last 3 days of gains from Rs 8.89 on September 1.

Vodafone Idea share is trading higher than 5, 20, 50, 100 and 200-day moving averages. Vodafone Idea shares have gained 24% in one week, 45% in one month and 103% since the beginning of the year. Market capitalisation of the firm stood at Rs 36,005 crore as of today's session.

In a move to pursue fundraising options for clearing AGR dues and invest in its network, Vodafone Idea has reportedly resumed talks with US-based e-commerce giant Amazon and telecom operator Verizon to buy "a significant stake" in ailing telco for more than $4 billion.

This comes after the Supreme Court on Monday ordered telecom operators to clear 10% of AGR outstanding dues this year and the rest in equal instalments over 10 years, starting FY22. The telco has already paid Rs 7,854 crore to the department of telecom and owes the government Rs 58,254 crore.

Although, the company has denied such media reports stating "Currently, there is no proposal as reported by the media that is being considered at the board," in a separate regulatory filing on Thursday night.

The telecom operator also added that as part of the firm's corporate strategy, it is constantly evaluating various opportunities for enhancing stakeholders' value. "As and when such proposals are considered by the board of directors of the company warranting disclosures, the company shall comply with the disclosure obligations," the telco added.

On Vodafone share, Keshav Lahoti, Associate Equity Analyst, Angel Broking said, "On September 1, Vodafone Idea stock corrected by 13.2% as the Supreme Court allowed a 10-year staggered payment timeline to pay AGR dues against 15-20 years anticipated by the market. On September 2, Vodafone Idea rallied by 11.9% on company announced the board of directors is scheduled to meet on September 4 to evaluate all proposals to raise funds. This clearly indicated that the Company is not planning to shut the shop post the Supreme Court verdict. Today also stock is trading up by 11% on the basis of media reports that retailer Amazon and Verizon, one of the largest communication technology companies may invest more than $4 billion (more than half of the pending AGR dues) for a stake in the company.

He added," If this report turns out to be true then certainly Vodafone Idea will survive in the industry for at least next few years. So this will solve the first problem of the Company i.e. paying AGR dues for the next few years. The second problem company needs to fix is to maintain its losing revenue market share by developing a proper strategy. The third hurdle for the Company is ARPU hike in the industry. Vodafone Idea and Bharti Airtel are in favour to hike tariff plans steeply, although Jio is not ready to hike its plan rates. So Vodafone Idea and Bharti Airtel are not able to hike tariffs as it will lead to a loss in subscribers for them."

"We believe if these three actions happen then Vodafone Idea will survive successfully raising the desired quantum of funds, preventing its losing revenue market share and ARPU hike in the industry," he added later.

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