InvestorQ : Why were telecom stocks like Vodafone Idea and Bharti Airtel on a tear on Friday?
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Why were telecom stocks like Vodafone Idea and Bharti Airtel on a tear on Friday?

Answer
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Rashi Mehra answered.
4 weeks ago


It was a day that surely belonged to telecom stocks on 28 August. Vodafone Idea surged 17.45% at one point of the day as did Bharti Airtel rallying by 2.7%. As a result, the S&P BSE Telecom index was up 3.44% and was among the top performers on the index.

As of now, the telecom companies are still awaiting the final SC judgement in the AGR case. The SC has reserved its judgment in the case but the court had sought clarity on the telecom dues that were to be recovered from the telecom companies that were already bankrupt.

The court’s verdict on the tenure and the extension for paying AGR dues will have a material impact on Vodafone Idea. However, its spectrum ruling will have an impact on Bharti Airtel and RIL, which have spectrum from Vodafone and RCOM respectively.

The judgement on additional liabilities will determine how much Reliance Jio and Bharti Airtel will have to shell towards the past dues of Reliance Communications, Videocon and Aircel. The judgment on spectrum sharing versus transfer will also be a critical issue.

The court had already ruled out any scope for reassessment or re-calculation of the AGR related dues of telecom companies toward DOT. That has been treated as a settled matter and already upheld and is an established liability to be paid by the telecom companies.

The SC may be a little more considerate considering the situation that telecom companies find in. Telecom companies lost 56 lakh wireless subscribers in May due to the nationwide lockdown. Jio added subscribers at the cost of Bharti Airtel and Vodafone Idea.