Vodafone loses over Rs 2,700 crore in market cap after KM Birla offers to give his stake to Centre
In a letter, Birla told the government that he was willing to hand over his 27.66% stake in the debt-laden firm to any entity that could keep it ‘going’.
Vodafone Idea Limited, which is struggling to pay its adjusted gross revenue dues to the government, lost more than Rs 2,700 crore in market cap on Tuesday, NDTV reported. Market capitalisation, or market cap, is the market value of a publicly traded company’s outstanding shares.
This came after it was revealed that Vodafone Idea chairperson Kumar Mangalam Birla has told the government that he was willing to hand over his 27.66% stake in the debt-laden company to any entity, public or private, that could keep it “going”.
In a letter written on June 7 to Cabinet Secretary Rajiv Gauba, Birla said that potential foreign investors were not willing to put their money in the company due to lack of clarity from the Centre on matters such as adjusted gross revenue liability, moratorium on spectrum payments and a floor pricing.
Without the government’s immediate support on these three points, the billionaire businessman, warned that Vodafone Idea’s financial situation would drive its operations to an “irretrievable point of collapse”.
During the intra-day trade on Tuesday, Vodafone Idea stocks crashed 12% to hit a 52-week low before recovering slightly. Equity markets, however, soared as stocks of information technology and consumer goods firms rallied on economic indicators showing an uptick.
According to official data, Vodafone Idea’s adjusted gross revenue liability is Rs 58,254 crore, of which it has paid Rs 7,854.37 crore, PTI reported. In addition to this, as of March 31 this year, the company owed Rs 96,270 crore in deferred spectrum payment obligations and another Rs 23,000 crore to banks and financial institutions.
Last month, the Supreme Court rejected the applications of major telecom companies, including Vodafone Idea, seeking corrections of what they called errors in the government’s calculation of their dues.
In September 2020, the Supreme Court had granted the telecom companies 10 years to clear their pending dues to the central government with 10% payment to be made every year. The deadline for the first installment was March 31, 2021.