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Tuesday, November 30, 2021

Vodafone Idea shares tank nearly 18% on ratings downgrade by Care Ratings

The rating on long term bank facilities and non-convertible debentures of Vodafone Idea (VIL) has been revised to 'BB-' from 'BBB-', Care Ratings said.

By: Express Web Desk | New Delhi |
Updated: February 18, 2020 6:37:40 pm
India’s Supreme Court Agrees to Hear Vodafone’s Plea Over Payments On Monday, after getting a rap from the Supreme Court (SC), telecom firms Bharti Airtel, VIL and Tata Teleservices paid a part of the outstanding dues. (Representational image)

Shares of telecom giant Vodafone Idea (VIL) cracked as much as 17.65 per cent to Rs 2.80 apiece on the National Stock Exchange (NSE) in the intraday trade on Tuesday, a day after CARE Ratings downgraded the company’s ratings on the long-term bank facilities and non-convertible debentures.

On the BSE, the stock of VIL slipped 17.25 per cent to Rs 2.83 during the intraday trade. It eventually ended at Rs 3.03, down 11.40 per cent. On NSE, the Vodafone Idea scrip fell 10.29 per cent to settle at Rs 3.05.

In terms of trade volumes, over 15.31 crore shares were traded on the BSE during the day’s trade while over 64.25 crore shares exchanged hands on the NSE.

The rating on long term bank facilities and non-convertible debentures has been revised to ‘BB-‘ from ‘BBB-‘.

“The revision in the long term ratings assigned to the various bank facilities/instruments of Vodafone Idea Limited (VIL) takes into account the significant erosion in the overall risk profile of the company while taking into cognizance of the financial impact of no relief being granted on modification plea on 14th February 2020 of telecom companies (telcos) seeking new schedule of Adjusted Gross Revenues (AGR) dues by Hon’ble Supreme Court (SC) and significant losses to the tune of Rs 6,453 Crores in Q3FY20,” CARE Ratings said in its rating rationale on VIL.

“Provisions for AGR dues and these losses have resulted in the significant deterioration in the tangible net worth and overall debt protection metrics; leading to sharp erosion in the overall financial risk profile of VIL,” the rating agency said.

It further said that the ability of VIL to maintain its operational performance in the middle of prevalent competition in the country’s telecom industry and fructification of the envisaged deleveraging measures continue to be key rating sensitivities. Further, the continuity of support extended by the Vodafone Group as well as Aditya Birla Group to VIL will continue to be critical as well as a key monitorable.

On Monday, after getting a rap from the SC for missing the deadline for payment of the adjusted gross revenue (AGR) dues, top telecom firms Bharti Airtel, VIL and Tata Teleservices scrambled to pay a part of the outstanding dues. Bharti Airtel paid Rs 10,000 crore, VIL put in Rs 2,500 crore and promised to pay another Rs 1,000 crore before the end of the week. Tata Teleservices paid Rs 2,197 crore.

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