Vodafone Idea Stock Falls By 6% After Hitting New 52-Week High On September 18 - What's The Driving Force?

Troubled telecom services provider, Vodafone Idea shares are in a roller coaster ride during Monday's trading session. The stock went from hitting a new 52-week high to free falling by nearly 7% in the first half of the session. The telco is in news for its requisite payment of Rs 1,701 crore to Telecom Department towards spectrum auction, while it clarified on buzz over US telecom giants to acquire the company soon.

On Monday, Vodafone Idea shares opened in high spirits at Rs 12.38 apiece and flexed to touch a new 52-week high of Rs 12.40 apiece soon after. However, the stock toppled by nearly 6% with an intraday low of Rs 11.06 apiece after the company issued clarification over the acquisition buzz.

At the time of writing, Vodafone Idea stock traded at Rs 11.24 apiece, down by 4.18% on BSE. Its market cap is nearly Rs 54,700 crore.

In its regulatory filing on September 18, Vodafone Idea clarified on the news item titled "Vodafone Idea to be acquired by a US telecom giant Soon? Verizon, Amazon, or Starlink, in the race", which is doing rounds in electronic and social media.

A report from PGurus highlighted that market experts expect a US telecom giant to invest and take control of Vodafone Idea soon. Biggies like Verizon Communications, Amazon and Elon Musk-backed Starlink were some of the names that were seen as potential buyers of the Indian telecom company.

To this, Vodafone Idea clarified saying, "We wish to submit that the said News Item is incorrect. The Company is not in any such discussion with any of the named parties."

Vodafone Idea shares reacted bearishly to the clarification.

The surge in the opening bell can be attributed to the company's spectrum dues repayment.

In another development, on Saturday, Vodafone Idea announced that it has made the requisite payment of ~ Rs 1,701 crore (including interest) to the Department of Telecommunications, Government of India, towards the 2022 Spectrum Auction Instalment, in accordance with the terms of Notice Inviting Applications dated 15th June 2022.

Last week, on Friday, Vodafone Idea shares stood at Rs 11.73 apiece.

In its research note dated September 11, Yes Securities on Vodafone Idea said, "The financial condition of VIL remains precarious on account of high debt burden as it remains a loss-making telecom operator. It continues to lose subscribers mainly in the 2G segment even as 4G addition has remained muted. It has the lowest ARPU in the industry on account of a higher 2G customer mix. It urgently needs massive capital infusion of around Rs 500 billion to 600 billion to augment its capex to catch up with peers. We have Sell Rating on the stock with target price of Rs 6/share at EV/EBITDA of 8.5x on FY25E."

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