India’s Vodafone Idea surges 20% after government floats relief package By Reuters
BENGALURU (Reuters) – Shares of Vodafone (NASDAQ:) 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.
A four year moratorium on government airwaves payments, a 30 year extension of the airwaves tenure for firms and free spectrum sharing between all carriers are part of the relief package.
After long claiming that all non-telecom revenue from companies was included in AGR, the government is changing how adjusted gross revenue (AGR), which will now only include telecom revenues. This follows a $13 billion bill for wireless carriers.
This had added to the problems in the sector already struggling from Mukesh Ambani’s entry into the Reliance Jio market. It sparked a price war which drove some competitors out and made profits disappear.
Vodafone Idea shares rose 20%, reaching their highest level since June 29th. Bharti Airtel gained 1.4% but lost its early gains.
IDFC First Bank (NASDAQ:), 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%.
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