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India’s Vodafone Idea surges 20% after government floats relief package By Reuters


© Reuters. FILEPHOTO: An employee of a hotel clears a table following the Vodafone Group and Idea Cellular news conference, Mumbai (India), March 20, 2017. REUTERS/Danish Siddiqui/File Photo

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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