Vodafone Idea shares jump 7%; two key developments you need to know about the company

The stock price jumped as the telecom department has waived the requirement of a bank guarantee to be submitted for spectrum auctions held before the reform package, Vodafone Idea said on Saturday, adding that the latest "relief" will boost 4G and 5G investments in India.

Before this reform, bank guarantees aggregating to about ₹24,800 crore were required to be provided by VIL against each spectrum installment.

There would, however, be a one-time partial shortfall, only for the 2015 auction, where the net present value, or NPV, of all payments made, would be less than the pro-rated value of spectrum used, VIL said, and informed that it is "in discussion with the DoT to determine the final amount of this partial shortfall for the 2015 auction."

"This step of BG waiver is a clear indication of the government's continued support to the telecom industry. It will ensure that the exposure of the banking system is utilised by telecom operators towards the further proliferation of 4G and 5G networks in India," the VIL filing said.

The Department of Telecom (DoT) in a communication dated December 27, 2024, has dispensed with the requirement of submission of financial bank guarantees for the spectrum acquired in auctions held in 2012, 2014, 2015, 2016, and 2021, subject to certain terms and conditions.

Vodafone Group had pledged almost the entire stake in VIL to raise the debt.

The pledge was created in favour of HSBC Corporate Trustee Company (UK) for the debt raised by Mauritius and India-based entities of Vodafone Group.

Vodafone Group holds a 22.56% stake, while the Aditya Birla Group holds 14.76%. The government has a 23.15% stake as of September 30, 2024.