Vodafone Idea Surges 30% After Government Announces Relief Measures
Shares of the country's third largest telecom operator, Vodafone Idea, rose as much as 30 per cent to hit an intraday high of Rs 11.47 a day after the government announced relief measures for the cash-strapped telecom sector. The Union Cabinet headed by Prime Minister Narendra Modi announced a four-year moratorium on the pending adjusted gross revenue (AGR) dues of the telecom operators, a move that will provide much-needed relief to the likes of Vodafone Idea and Airtel.
The government also changed the definition of AGR as that was an area of contention between telecom companies and the telecom department and a major cause for stress in the telecom sector.
According to this calculation, Bharti Airtel, Vodafone Idea and Reliance Communications had owed around Rs 92,000 crore to the government as license fees and Rs 41,000 crore as spectrum usage fees, according to the telecom department.
In a big telecom reform, the centre allowed 100 per cent foreign direct investment (FDI) in the telecom sector through the automatic route as part of its comprehensive package for the telecom sector."100 per cent FDI in telecom via the automatic route was approved by the cabinet," telecom minister Ashwini Vaishnav said while briefing reporters on the decisions taken by the cabinet.
IDFC First Bank, Yes Bank and IndusInd Bank, which have respective exposures to Vodafone Idea of 3 per cent, 2.4 per cent and 1.7 per cent of their loan books, according to Nomura, climbed between 2-8 per cent.
As of 12:49 pm, Vodafone Idea was up 27.66 per cent at Rs 11.40, outperforming the Sensex which was 0.24 per cent.