Vodafone Idea shares surge 18% after Union Cabinet approves bank guarantee waiver

Vodafone Idea share price today: Vodafone Idea (Vi) shares surged 18.08% to Rs 8.23 on the BSE during early Tuesday trading, following the Union Cabinet’s in-principle approval regarding the company’s bank guarantee matter. At 2:53 PM, shares of Vi were trading at Rs 7.59, up 8.74%.
The Cabinet offered relief to telecommunications firms by eliminating bank guarantee requirements for spectrum acquisitions through 2022. The Department of Telecommunications (DoT) had supported this waiver for spectrum purchases.
The reforms of 2021 had already removed bank guarantee requirements for auctions from 2022 onwards. Vi’s total bank guarantee obligation stands at Rs 24,700 crore, with the spectrum auction dues moratorium concluding in October 2025.
Vodafone Idea defaulted on its second bank guarantee (BG) payment of approximately Rs 350 crore on November 1, relating to spectrum acquired in the 2012 auction. Previously, the company had missed a BG payment exceeding Rs 4,600 crore for 2016 spectrum auction in September, as reported by ET.
Although Vi spearheaded the BG waiver request, with support from other telecommunications firms, the government’s decision particularly advantages Vi. Whilst competitors Bharti Airtel and Reliance Jio also require BG submissions for previous auction payments, their obligations are considerably smaller than Vi’s.
Bharti Airtel faces a BG payment of roughly Rs 2,200 crore due in September next year for the 2016 auction. Jio’s obligation of approximately Rs 4,400 crore follows afterwards.
Vi requested the waiver citing financial constraints, anticipating that this would enable banks to extend additional credit facilities to the company.
Following this development, Bharti Airtel shares increased by 1.6% to Rs 1,604.95, whilst Jio Financial Services shares declined nearly 1% to Rs 320.10 on the BSE.