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Informist, Friday, Sep 20, 2024

MUMBAI - Shares of Vodafone Idea and Indus Towers are expected to remain under pressure after the Supreme Court Thursday rejected a batch of curative petitions filed by telecommunication companies, against the apex court's earlier order on adjusted gross revenue calculations. While petitions by Bharti Airtel were also rejected, the effect of the order on the company is seen limited.

The petitions arose from an order by the top court in 2020, which granted 10 years to telecom companies to clear their adjusted gross revenue dues to the Department of Telecommunications, asking these companies to pay 10% of the dues upfront. The Department of Telecommunications had estimated Bharti Airtel's dues at 439.80 bln rupees, way higher than the company's estimate of 130.04 bln rupees. The department has estimated Vodafone Idea's dues at 582.54 bln rupees compared with the company's assessment of 215.33 bln rupees. 

This update may have a major negative impact on Vodafone Idea, a research analyst covering the sector at a domestic brokerage firm said, adding that investors were counting on a waiver for adjusted gross revenue dues. This comes at a time when the company's survival is in question, the analyst said. A 16-20% hike in tariff may benefit the company, but that is expected to take some time. Shares of Vodafone Idea fell nearly 22% this week. Consequently, Indus Towers stock also fell over 9% this week, as around 30-40% of the company's total revenue comes from Vodafone Idea.

As per Morgan Stanley, the competitive position of strong players such as Bharti Airtel may improve given the weak balance sheets of its peers. The brokerage believes the company is at a sweet spot, despite shrinking expectations of potential relief from the adjusted gross revenue case. Brokerage firm Macquarie expects the market-share erosion to continue and a meaningful dilution risk for the sector.

As per the data released by Telecom Regulatory Authority of India, Indian telecom companies net lost 922,375 wireless telecom subscribers in July, compared with 1.57 mln mobile subscribers added in June. According to data, Reliance Jio Infocomm, Bharti Airtel, and Vodafone Idea lost customers in July, while the government-owned Bharat Sanchar Nigam added users.

TOP HEADLINES
* Data Alert: India net lost 922,375 mobile subscribers in July
* Bharti Airtel arm, Cisco launch network solution for enterprises
* TRAI proposes unified svcs authorisation norms; moots entry fee cut
* SC rejects Bharti Airtel, Vodafone Idea's curative plea on AGR dues
* BSNL needs to expedite 4G rollout, says Minister Scindia
* PRESS: Airtel to order 84 bln rupees worth of 4G gear over 3 years
* RailTel Corp gets 487-mln-rupee order from Health Insurance TPA

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anjali Singh
Edited by Akul Nishant Akhoury

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