Vodafone Idea surges by 20% after government floats relief package

The package comes at a time when the sector has been reeling from the entry of Mukesh Ambani’s Reliance Jio.

September 16, 2021 12:13 pm | Updated 12:55 pm IST - BENGALURU

Vodafone Idea Limited’s shares climbed nearly 20% on Thursday while banks with exposure to the firm also climbed following approval of a relief package.

Vodafone Idea Limited’s shares climbed nearly 20% on Thursday while banks with exposure to the firm also climbed following approval of a relief package.

Shares of Vodafone Idea Limited surged by nearly 20% on Thursday while banks with exposure to the embattled telecom firm also climbed, a day after India’s federal cabinet approved a relief package for the cash-strapped sector.

The relief package includes a four-year moratorium on airwaves payments due to the government raising the tenure of airwaves held by firms to 30 years from 20, and the complete freesharing of spectrum between carriers.

The government will also change the contentious definition of adjusted gross revenue (AGR) to count only telecom revenue, after long holding that even companies’ non-telecoms revenue was a part of AGR – amounting to a bill of roughly $13 billion for wireless carriers.

The dues had compounded troubles in a sector that was already reeling from the entry of billionaire Mukesh Ambani’s Reliance Jio, sparking a price war that forced some rivals out of the market and turned profits into losses.

Vodafone Idea shares climbed 20% to their highest since June 29, while Bharti Airtel rose up to 1.4% before shedding early gains.

IDFC First Bank, Yes Bank and IndusIndBank, which have respective exposures to Vodafone Idea of 3%, 2.4% and 1.7% of their loan books, according to Nomura, climbed as much as between 2% and 8%.

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