Why shares of Vodafone Idea fell 20% from the 52-week high after……

Shares of Vodafone Idea (Vi) took a dramatic hit on Wednesday, plunging 19.84% and slipping below its Follow-On Public Offer (FPO) price of Rs 11 from a 52-week high of Rs 12.80 per share with heavy volume. The sharp decline occurred even as the Union Cabinet moved to provide a significant lifeline by freezing Rs 87,695 crore in Adjusted Gross Revenue (AGR) dues for five years. While the market capitalisation settled around Rs 1.17 lakh crore, the stock’s fall to Rs 10.28 reflected investor disappointment, as many had anticipated a more aggressive waiver of at least 50% to secure the company’s long-term viability.

The approved relief package centres on a strategic moratorium, rescheduling the massive Rs 87,695 crore debt to be paid out between FY32 and FY41. Additionally, the Department of Telecommunications (DoT) will reassess these frozen dues based on audit reports, though liabilities specifically from FY18 and FY19 remain payable over the next five years. This structured delay is intended to ease the immediate pressure on Vi’s stretched balance sheet, which has been burdened by total AGR liabilities exceeding Rs 83,400 crore and a persistent struggle to secure fresh Bank lending.

This Cabinet decision follows a recent Supreme Court ruling that allowed the government to reconcile and reassess dues, including interest and penalties, up to FY17. The telco had previously argued for waivers on specific demands, citing that a large portion of recent DoT claims related to pre-merger liabilities. With the government already holding a nearly 49 per cent stake in the company—following the conversion of over Rs 36,950 crore of dues into equity earlier this year—the state remains the most significant stakeholder in Vi’s survival.

Despite the breather provided by the moratorium, the company’s path forward remains challenging. Serving nearly 198 million subscribers and employing over 18,000 people, Vodafone Idea continues to emphasise that its ultimate survival depends on securing timely funding. While the five-year freeze prevents an immediate collapse, the negative market reaction suggests that investors are still wary of the telco's ability to compete and innovate while carrying such a heavy long-term debt burden toward the next decade.

Disclaimer: The article is for informational purposes only and not investment advice.