Vodafone Idea Shares Hit 52-Week Low After DoT Notice; Plunge 7% Amid Bank Guarantee Woes

The shares of telecom operator Vodafone Idea plunged sharply on Monday (October 7), losing over 7 per cent and hitting a 52-week low of Rs 8.90 on the National Stock Exchange (NSE). The sudden decline in the share price of the company comes after a notice from the Department of Telecommunications (DoT) regarding the company’s failure to submit bank guarantees for past spectrum auction dues.

At 1:22 pm IST, the shares of the company were trading at Rs 9.18 apiece, down by 6.23 per cent.

Five-Day Losing Streak

The company stock decline today marks the fifth consecutive day of losses for Vodafone Idea’s stock. During this period, the company’s shares have plummeted by 17 per cent.

Year-to-date basis

On a year-to-date basis, the company's stock decreased by 44 per cent. The shares of the company in June 2024 reached a a 52-week high of Rs 19.15 in June 2024.

The recent notice from the DoT, linked to Vodafone Idea’s inability to pay bank guarantees for spectrum auctions held before 2022, only added to its woes.

Over the past three months, the company has lost nearly half of its market value, while the past month alone has seen the stock fall by 33 per cent.

The Bank Guarantee Requirement

The crux of the issue stems from the company's non-compliance with the bank guarantee requirement for spectrum auctions held before 2022.

While telecom companies are no longer required to submit guarantees for airwaves bought in auctions after 2022, older regulations mandated a guarantee equivalent to one annual payment, Economic Times reported.

Vodafone Idea had previously requested the DoT for an exemption from providing these guarantees. However, as no official decision has been made, the company remains liable for submitting a guarantee worth Rs 24,700 crore to cover its dues.

According to the Economic times report, the guarantees were supposed to be submitted in phases, with the first due by September 20, 2024. The moratorium on Vodafone Idea’s spectrum payments will expire in September 2025, leaving the company with limited time to address its financial obligations.