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Telecom stocks rise after govt approves major reforms, allows 100% FDI – Moneycontrol.com

Union Cabinet on September 15 announced a moratorium of four years for the payment of the Adjusted Gross Revenue (AGR) dues, providing a relief to the debt-strapped telcos – Vodafone Idea and Bharti Airtel

Telecom stocks are in focus as the the government approved major reforms in the telecom sector.

Union Cabinet on September 15 announced a moratorium of four years for the payment of the Adjusted Gross Revenue (AGR) dues, providing a relief to the debt-strapped telcos – Vodafone Idea and Bharti Airtel.

With the reform measures, the government aims to boost the proliferation and penetration of broadband and telecom connectivity in the country. Apart from this the government is looking to boost 4G proliferation, infuse liquidity and create an enabling environment for investment in 5G networks with the new set of reform measures.

Share price of Vodafone Idea gained the most hitting upper circit on BSE. It was trading at Rs 9.82, up Rs 0.89, or 9.97 percent. It has touched an intraday high of Rs 9.82 and an intraday low of Rs 9.82. There were pending buy orders of 28,452,960 shares, with no sellers available.

The other telecom gainers included Indus Towers, Reliance Communications, Vindhya Telelink, Sterlite Tech and Bharti Airtel which added 1-6 percent each.

The four year moratorium also extends to other telecom dues such as the due payments of spectrum purchased in the past auctions except the recently concluded auctions earlier this year.

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The deferment is protected by an interest component, which the telecom companies will have to pay right from the first day of the commencement of the moratorium period from October 1, at the rate of MCLR plus 2 percent.

Vodafone Idea, promoted by Aditya Birla Group and UK’s Vodafone Group, has paid Rs 7854 crore as AGR dues, meanwhile Bharti Airtel has paid Rs 18,000 crore as AGR dues.

Both Vodafone Idea and Bharti Airtel have been trying to get their AGR dues reduced through legal means but so far all their efforts have failed. In fact, the telcos had even moved a review petition for a July order by the Supreme Court which had junked their pleas for recalculation of their AGR liabilities saying that there have been arithmetical errors on the part of the telecom department in calculating the dues.

A 100 percent FDI (Foreign Direct Investment) in telecom via the automatic route was also approved by the Cabinet.

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