Vodafone Idea hits lowest level since September 2021, down 6% in firm mkt

Shares of Vodafone Idea hit a 52-week low of Rs 7.35, falling 6 per cent on the BSE in Monday's intra-day trade, amid heavy volumes in an otherwise firm market.

The stock of the telecom services provider was trading at its lowest level since September 2021. It has fallen below its previous low of Rs 7.61, touched on December 23, 2022. In comparison, the S&P BSE Sensex was up 1.6 per cent at 60,841.

Till 11:33 AM, average trading volumes on the counter had jumped nearly 1.5 times with a combined 250 million equity shares, representing 0.78 per cent of total equity of Vodafone Idea, having changed hands on the NSE and BSE.

According to a media report, the Department of Telecommunications (DoT) is now looking at the financials and the operations of Vodafone Idea to ascertain its health. The government will study the telco's strength with the customers and its performance.

Meanwhile, according to a Reuters report, loss-making Indian telecom operator Vodafone Idea has sought at least Rs 7,000 crore ($846 million) in emergency funds from local banks, which are reluctant to extend fresh loans.

"The company needs the funds to remain in business. But the lenders will wait for either a capital increase by its main shareholders - UK-based Vodafone Group and local investor Aditya Birla Group - or a debt-to-equity conversion by the government before granting the debt-laden operator more funding," the report said. CLICK HERE FOR FULL REPORT

Vodafone Idea is awaiting a final nod on a government package that would allow it to convert interest of $1.95 billion on deferred adjusted gross revenue owed to the government into equity.

"Continued subscriber loss along with a slow 5G rollout, which is subject to capital infusion, is expected to dilute earnings. Q2FY23 annualized EBITDA of Rs 16,400 crore may not be sufficient to meet debt repayments, which includes intensive capex needs and the ability to compete fiercely to retain market share," analysts at Motilal Oswal Financial Services had said in a September quarter result update.

The significant amount of cash required to service debt leaves limited upside opportunities for equity holders, despite the high operating leverage opportunity from any source of ARPU increase. The current low EBITDA will make it challenging to service debt without an external fund infusion, the brokerage firm had said.