On Friday, shares of Vodafone Idea were up 10% to a new 52-week high of Rs 13.50 on the back of heavy volumes in an otherwise weak market. According to data from the stock exchanges, a total of 733 million equity shares changed hands on the counter on the NSE and BSE.
Shares of the telecom operator have been climbing in the last three months after the company rebranded itself as Vi, despite its financial challenges.
The stock has surged 69% in the last three months when compared to a 24% surge in BSE's Sensex. It is also higher than Bharti Airtel's 50% increase in share value during the period and Reliance Industries Limited's 11% slump.
On 8 January, in a petition to the Supreme Court, Vodafone Idea has brought to notice some matters of dispute as regards its calculation of adjusted gross revenue (AGR) dues.
As per Vi's claims, the payments it has made have not been accounted for by the Department of Telecommunications (DoT). Also, there has been double-counting of some revenue items in the AGR demand and deduction has not been made by the department on account of roaming charges paid by the operator.
Commenting on this move, Goldman Sachs said earlier this week that Vi will continue losing market share and it is unlikely that the telecom operator will increase investments in the network as cash flows are expected to be negative even if its liability towards the government is lowered.
According to DoT, Vi owes Rs 58,254 crore in AGR dues, including principal, interest, penalty, and interest on the penalty. However, as per the telco's self-assessment, it owes the government Rs 21,533 crore. Vi has so far paid Rs 7,854 crore.
"On our estimates, Vodafone Idea could potentially save Rs 58 billion (5,800 crore) in cash flows annually if the AGR liability were lowered to its self-assessed value... We expect Vodafone Idea's FCF (free cash flow) to remain negative for the foreseeable future, irrespective of the level of company's AGR dues," Goldman Sachs said in a report.
Goldman Sachs said a reduction in AGR dues to self-assessed levels if allowed by the apex court, would not change the telecom industry's competitive landscape.
"While incrementally positive for Bharti Airtel and Vodafone Idea from a cash flow and net-debt standpoint, we believe AGR dues at the lower self-assessed levels would have little-to-no impact on the industry's competitive landscape," it said.