Shares of Vodafone Idea (Vi) climbed over 4% in early trade on Thursday, January 1, after the telecom operator disclosed that it will receive around ₹5,836 crore from Vodafone Group as part of a revised settlement of a long-pending liability arrangement between the two companies.
According to regulatory filings by both entities, the payment forms part of a re-settlement of claims under the Contingent Liability Adjustment Mechanism (CLAM), which was originally put in place at the time of the 2017 merger of Vodafone India and Idea Cellular.
Under the amended agreement, Vodafone Group promoters will release ₹2,307 crore to Vodafone Idea over the next 12 months, in line with revised settlement terms. In addition, Vodafone Group has set aside its 328 crore shares held in Vodafone Idea for the benefit of the company, further strengthening Vi’s financial position.
Stock movement
On the National Stock Exchange, Vodafone Idea shares touched an intraday high of ₹11.28, gaining 4.83%, before paring some gains to trade at around ₹11.23, still up over 4% in early trade.
What is CLAM?
The CLAM arrangement covers pre-merger contingent liabilities related to legal, regulatory, tax, and other matters of the merging entities. At the time of the merger, Vodafone Group’s maximum exposure under CLAM was capped at ₹8,369 crore. After accounting for payments already made, the exposure was reduced to ₹6,394 crore, with the extended deadline for settlement ending on December 31, 2025.
AGR relief adds to optimism
Investor sentiment was also supported by reports that the Union Cabinet has likely approved a five-year moratorium on Vodafone Idea’s adjusted gross revenue (AGR) dues. As per media reports, the Cabinet has approved freezing Vi’s AGR dues at ₹87,695 crore as of December 31, with repayments rescheduled over FY2032–41.
The decision reportedly allows for a fresh reassessment of AGR dues by a government-appointed panel, with the final amount to be binding on both the Centre and the company. Government sources said the move was taken in public interest to avoid excessive concentration in the telecom sector.
However, after market hours on Wednesday, Vodafone Idea clarified that it has not yet received any formal communication from the government regarding the reported AGR relief.
Quick Read
Why did the stock rise?
Vodafone Idea will receive ₹5,836 crore from Vodafone Group under a revised liability settlement.
What’s included?
₹2,307 crore cash infusion over 12 months and 328 crore Vodafone Group shares set aside for Vi.
Additional trigger
Reports of Cabinet approval for a five-year AGR moratorium.
Caution
Vodafone Idea says it has not received official communication on AGR relief yet.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Stock prices are subject to market risks and regulatory developments. Investors should consult certified financial advisors before making investment decisions.
