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Why did Vodafone Idea shares jump 17%? September 04 2021Vodafone Idea, Vodafone Idea shares, Supreme Court

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Why did Vodafone Idea shares jump 17%?

On September 2, the share price of Vodafone Idea increased by more than 17% after Aditya Birla Group (ABG) Chairman Kumar Mangalam Birla reportedly met with Telecom Minister Ashwini Vaishnaw.

VIL closed at Rs 7.14 on the BSE, up Rs 1.05, or 17.24 percent. It reached a high of Rs 7.29 intraday.

The meeting takes place at a time when the government is planning some relief measures for the telecommunications industry.

Birla and Vaishnaw discussed the state of the telecom sector and the immediate need for government intervention. Birla resigned as chairman of the cash-strapped telco last month. According to sources, the government is now considering some relief measures for the entire sector, not just the company.

VIL, a joint venture between ABG and Vodafone Group, and it is the country's third-largest telecom operator. However, it is obligated to pay Rs 51,400 crore in dues after the Supreme Court ordered that non-telecom revenues be included in calculating statutory dues. The court also denied its request to recalculate the AGR dues due to arithmetic errors.

While the company stated that it is not attempting to avoid paying the dues, if the arithmetic errors in the dues were not corrected, the telco would be forced to close its doors.

Given this, Birla wrote to the government, stating that he is willing to sell his stake in the telco to any government entity in order to keep the company afloat.

For the first quarter of fiscal year 2021-22, the company reported a loss of Rs 7,319.1 crore. According to VIL's quarterly report (April-June 2021), revenue decreased by 4.7 percent QoQ to Rs 91.5 billion due to a slowdown in economic activity caused by lockdown/restrictions in several districts during the harsh second wave of COVID-19.

According to the company, EBITDA for the quarter was Rs. 37.1 billion, with EBITDA margins of 40.5 percent compared to 45.9 percent in Q4FY21. Its net worth, however, is negative Rs 4,55,409 million.

On 15 January 2021 and 05 August 2021, the share reached a 52-week high of Rs 13.80 and a 52-week low of Rs 4.55, respectively.

It is currently trading 48.26% below its 52-week high and 56.92% above its 52-week low.

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