Vodafone Idea shares tumbled over 15% on Thursday, a day after the troubled telecom operator’s board accepted Kumar Mangalam Birla’s request to step down as non-executive chairman. The shares have nosedived around 40% in the past three sessions alone. Kranthi Bathini, Wealthmills Securities spoke to Money9 on what the news developments mean for the company and investors.
“Telecom is a happening space but the industry is suffering, it has shrunk. Vodafone Idea has been struggling for long. The news of KM Birla stepping down has warned of dire circumstances. For investors, the stock is not fit for long term investors at the present juncture. There may be some speculations, it may go up again on any positive news but would still ask anyone wanting to buy this sharp dip not to do so. For those holding the stocks already can wait for some more clarity before taking a decision. We need to wait to find out whether there are signs of capital infusion or any support from the government coming up”, he said.
Vodafone Idea’s problems centre around the computation of adjusted gross revenues (AGR). According to the Department of Telecom, Bharti Airtel owed more than Rs 43,000 crore as AGR dues, while Vodafone Idea’s balance payment exceeded Rs 50,000 crore. Vodafone has been struggling to compete with the likes of Bharti Airtel and the Mukesh-Ambani controlled Reliance Jio in a market that witnessed the cheapest call and data rates globally, till very recently.
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