Vodafone Idea, Airtel, MTNL, Other Telecom Stocks Skyrocket Up To 19% Today; Know Why

Vodafone Idea, Airtel, MTNL, Other Telecom Stocks Skyrocket Up To 19% Today; Know Why

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Vodafone Idea shares witnessed the highest surge, climbing 18.6% to reach their intraday peak

Telecom Stocks Rise

Telecom stocks, especially those of cellular services and fixed-line providers, saw significant gains during Tuesday’s trading session, following media reports indicating that the government had approved a proposal to waive the bank guarantees (BG) telecom operators were required to provide for spectrum purchases made up to 2022.

Shares of companies like Vodafone Idea and Tata Teleservices (Maharashtra) surged, with Vodafone Idea jumping 18.6 per cent to reach a day’s high of Rs 8.28, while Tata Teleservices (Maharashtra) rose 13 per cent to touch Rs 78.11. Other telecom stocks also saw strong gains, with Indus Towers up by 5.5 per cent, Bharti Hexacom rising 4.5 per cent, and Tata Teleservices and Bharti Airtel gaining 1.8 per cent and 1.6 per cent, respectively.

This move is expected to provide substantial relief to telecom companies, which collectively owe over Rs 30,000 crore in BGs to the government. The decision is particularly beneficial for Vodafone Idea Ltd, which owes more than Rs 20,000 crore in BGs and has struggled with its financial obligations.

The Department of Telecommunications (DoT) has supported the waiver of BGs for spectrum purchases. The 2021 telecom reforms had already eliminated the BG requirement for auctions starting in 2022, but the waiver for past spectrum purchases will ease the financial burden on telecom players like Vodafone Idea.

Vodafone Idea, which was unable to pay its second BG of approximately Rs 350 crore due on November 1 for the spectrum acquired in a 2012 auction, stands to benefit the most from this decision. While other telecom companies, like Airtel and Jio, have BGs due in the coming years, Vodafone Idea’s massive outstanding obligations make it the primary beneficiary. Airtel’s BG for the 2016 auction, due in September 2025, is significantly lower, at about Rs 2,200 crore, and Jio’s BG is approximately Rs 4,400 crore, due shortly after Airtel’s.

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