Vodafone Idea Shares Climb 19% on Retrospective Tax Changes

On Thursday, the government did away with retrospective tax. This move has seen shares of Vodafone Idea climb as much as 19% in early trade on Friday.

Vodafone Idea Benefits from Retrospective Tax Changes

On Thursday, FM Nirmala Sitharaman introduced The Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha. The amendment withdrew tax demands made using a 2012 retrospective legislation on indirect transfer of Indian assets prior to May 28, 2012. Moreover, the government will refund all amount paid in these cases without interest.

As a result, Vodafone Idea's shares surged 19% to ₹7.04 on Friday. A day before, the telco's shares had dived 45% within a week off the back of Birla's resignation from the telco. Moreover, on Monday, a letter by Birla to the government offering his stake to the government to keep the telco afloat went public. As such, that also had a damaging effect on the telco's shares.

Last month, the SC had rejected AGR dues reassessment petitions by telecom companies, including Vodafone Idea and Bharti Airtel. Therefore, it has been bad news after bad news for the struggling telco.

Several media reports have suggested that Vi's lenders are suggesting a plan to swap Vodafone's debt with equity. This move will significantly dilute the promoters' stake in the telco.