With the recent news of Vodafone Idea, it seems major developments are expected to unfold in the telecom sector. There are too many questions expected from the government. Will the relief package comes for the telecom sector? Vodafone Idea will get relief from that package? What will be announced in the relief package? Is this really happening?
Well to answer all these questions, Senior Research Analyst Kushal Gupta talks about the latest developments happening in the telecom sector. Gupta said: “A lot of possibilities can unfold in the telecom sector, especially when the government is bringing a lot of specifications in this sector. The Prime Minister’s Office (PMO) is now taking interest in this. The PMO has asked the Department of Telecom (DoT) to prepare a relief package for the telecom sector.”
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He further said that many speculations are being made on what can be included in this relief package. “The first thing that can be expected is a 2 per cent deduction is the license fee. And if this is happening then all the telecom operators will get a relief of Rs 3,000 crore. In fact, if you will see the quantum, especially of Vodafone Idea, which has a gross debt of Rs 180,000 crore, then the Rs 3,000-crore relief is nothing. But if given then surely it will be of great help.
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The second thing that can be expected in the package is the spectrum instalment for the future. It is expected that the government can extend the moratorium further. The first extension happened in November 2019. To date, a relief of Rs 42,000 crore has been given to telecom operators. So, if Vodafone Idea or the whole telecom sector is getting this further extension then the maximum benefit Vodafone Idea will get, he added.
The third thing, the bank guarantee provisioning can be removed for the adjusted gross revenue (AGR) and Spectrum repayment. Again, this will be a big relief for Vodafone Idea, which is still struggling to update on the fund mobilisation. For other telcos, which are capable of providing bank guarantees, it will be a normal decision, Gupta said.
On Friday, DoT and the members of banks had a meeting. In this meeting, DoT asked banks that if under some guidelines these telcos can be given other relaxations? If this happens then this will be a positive step for these companies. For banks exposers, IDFC First Bank and Yes Bank can be impacted if Vodafone Idea moves further towards the collapse.
But, with the current series of events, it can be witnessed that the government is showing interest and if the relief package is announced then it will surely benefit Vodafone Idea in a big way!