BENGALURU (Reuters) – Shares of Vodafone Idea Ltd surged 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 completely free sharing 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 – 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 IndusInd Bank, 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%.
(Reporting by Rama Venkat in Bengaluru; Editing by Sherry Jacob-Phillips)
