Vodafone Idea shares breached a 26 per cent rise both on BSE and NSE, a day after the cabinet announced a slew of measures to bail out the struggling telecom sector. At the time of publish, Vodafone Idea stocks had risen 26.88% on BSE and 26.82% on NSE.
Wednesday's announcement bought immense cheer to the sector. Reliance Industries Chairman Mukesh Ambani welcomed the move. He said the move would help the industry participate and realise the goals laid out under by PM Narendra Modi under the Digital India initiative. (Full Story)
The same jubilance was shared by the debt-ridden Vodafone Idea. The company tweeted a statement, quoting Aditya Birla Group chairman Kumar Mangalam Birla saying, "The pathbreaking reforms announced by the government today will go a long way in unshackling the telecom sector. These reforms demonstrate the government's firm commitment to ensuring healthy growth of the industry". Birla added that the moves exhibited the Government's "decisiveness" to address long-term issues.
The Union Cabinet on Wednesday approved a four-year moratorium on payment of statutory dues by telecom companies (telcos). Telecom minister Ashwini Vaishnav said that the telcos will pay interest on the moratorium period.
The Union cabinet also allowed 100 per cent foreign direct investment (FDI) in the sector with safeguards. Vaishnav said that the Cabinet is rationalising aggregated gross revenue (AGR) definition, excluding non-telecom revenue of telcos from payment of statutory levies. AGR refers to revenues that are considered for payment of statutory dues.
The move is meant to bring relief to companies like Vodafone Idea, which owe large sums to the government. In October 2019, the Supreme Court had asked telecom operators pay Rs 1,19,292 crore worth of AGR dues to the telecom ministry. Bharti Airtel’s dues are estimated to be Rs 43,980 crore, while Vodafone Idea’s were Rs 58,254 crore.