Vodafone Idea (Vi) shares surged by over 15% on November 21, 2024, reaching ₹7.67, after a challenging period marked by a 7% drop in stock price over the past month. Here’s a breakdown of the key factors driving this rally.

Key Developments

A Nomura India report on November 15 highlighted that despite losing subscribers to BSNL due to tariff hikes in July 2024, Vodafone Idea's performance is now improving. The company’s management noted that the full impact of these hikes would be visible in the next two quarters. Additionally, Vodafone Idea plans to roll out 5G services by Q4FY25 and aims for 120 crore 4G population coverage by September 2025.

Government Approval and Debt Relief

A significant factor contributing to the stock's rally is the Cabinet's approval to waive the bank guarantees (BGs) telecom companies must pay for spectrum rights. Vodafone Idea stands to benefit the most, with the company owing ₹24,700 crore in deferred spectrum payments, due between September 2024 and February 2025. This waiver would reduce its financial burden, boosting investor sentiment.

Debt Situation

Vodafone Idea's debt has increased, reaching ₹2.12 lakh crore in Q2FY25, largely due to spectrum acquisition and vendor repayments. Despite this, the potential BG waiver offers a much-needed financial relief that could positively affect the company’s debt management moving forward.

Conclusion

The 15% spike in Vodafone Idea shares price reflects growing optimism among investors, fueled by favourable government policies and the company’s plans for expansion. While debt remains a concern, these positive developments suggest a possible recovery for Vodafone Idea shortly.