Bharti Airtel, Idea gain up to 4% after govt approves relief package for telecom sector
Bharti Airtel shares rallied 2.6 percent and Idea Cellular gained 4.3 percent intraday Thursday after the government has approved relief package for the debt-ridden telecom sector, giving more time to operators to pay for the spectrum bought in auctions.
On Wednesday, it has also relaxed the spectrum holding limit for the telecom operators, allowing telecom companies to pay for spectrum over 16 years instead of 10 years and permitted them to hold more airwaves.
The relaxed caps on holding spectrum will help ongoing mergers like that between Vodafone and Idea as the combined entity would have breached the current limits in certain circles or telecom zones.
The revised limit for spectrum holding may also encourage their participation in future auctions.
The Cabinet yesterday approved the two key measures to facilitate investments and consolidation in the sector. These include restructuring of deferred payment liabilities of telecom service providers for spectrum and revision of limit of spectrum holding caps.
These measures are expected to increase the cash flow for telecom operators immediately, providing them some relief, the official said.
A media report indicated that these measures may boost telecom companies cash flow by Rs 55,000 crore.
The package was cleared by the Cabinet based on the recommendations of the Inter Ministerial Group (IMG) on the telecom sector.
The IMG was tasked last year to suggest policy reforms and strategic interventions for the troubled sector bruised by falling tariffs, eroding profitability, and mounting debt in the face of stiff competition from new entrant.
The Indian telecom industry, which is locked in an intense tariff war, owes a staggering Rs 4.6 lakh crore to various financial institutions and banks.
At 11:20 hours IST, the stock price of Bharti Airtel was quoting at Rs 409.20, up 1.44 percent and Idea Cellular was up 0.82 percent at Rs 80.25 on the BSE.(With inputs from PTI)