Telecom stocks rise after Government approves major reforms, allows 100% FDI
stocks are in the spotlight after the government approved major telecom
Union Cabinet placed a four-year moratorium on the payment of Adjusted Gross
Revenue (AGR) dues on September 15, bringing relief to the debt-ridden carriers
Vodafone Idea and Bharti Airtel.
administration hopes to increase the spread and penetration of broadband and
telecom connectivity in the country with the reform initiatives. With the
latest set of reform measures, the government hopes to increase 4G spread,
infuse liquidity, and create a favorable environment for investment in 5G
Idea's stock rose the most on the BSE, reaching the upper circuit. It was up Rs
0.89, or 9.97 percent, to Rs 9.82. It reached a high of Rs 9.82 and a low of Rs
9.82 during the trading day. There were 28,452,960 shares on the market with
pending buy orders, but no sellers.
Towers, Reliance Communications, Vindhya Telelink, Sterlite Tech, and Bharti
Airtel were among the other telecom gainers, each increasing by 1-6 percent.
telecom dues, such as those for spectrum purchased in previous auctions, are
likewise exempted from the four-year moratorium, with the exception of the
just conducted auctions earlier this year.
postponement is safeguarded by an interest component, which the telecom
companies will be required to pay at the rate of MCLR plus 2% beginning on
October 1, the first day of the moratorium period.
Idea, a joint venture between the Aditya Birla Group and the Vodafone Group in
the United Kingdom, has paid Rs 7854 crore in AGR dues, whereas Bharti Airtel
has paid Rs 18,000 crore.
Vodafone Idea and Bharti Airtel have attempted to decrease their AGR dues
through legal channels, but their efforts have so far been unsuccessful. The
telecoms had also filed a review case for a Supreme Court judgement from July
that had dismissed their requests for recalculation of their AGR liabilities,
stating that the dues were calculated incorrectly by the telecom department.
Cabinet also approved a 100% FDI (Foreign Direct Investment) in telecom via the