Vodafone Idea, Airtel shares jump up to 8.5% amid govt move to set up panel to mitigate telecom financial stress

  • Shares of Vodafone Idea zoomed 8.57 percent to Rs 4.18 on the BSE

  • Bharti Airtel also gained 3 percent to Rs 370.80

  • As the telecom sector stares at a massive payout following a Supreme Court order, the government has created a Committee of Secretaries to work out a financial bailout package

New Delhi: Shares of Vodafone Idea and Bharti Airtel jumped up to 8.5 percent on Wednesday amid reports the government has constituted a panel to work out a bailout package for the telecom sector.

As the telecom sector stares at a massive payout following a Supreme Court order, the government has created a Committee of Secretaries to work out a financial bailout package that may include lowering of spectrum charges as well as ending the era of free mobile phone calls and dirt cheap data.

Shares of Vodafone Idea zoomed 8.57 percent to Rs 4.18 on the BSE.

Likewise, Bharti Airtel also gained 3 percent to Rs 370.80.

The Committee of Secretaries has been asked to examine "all aspects" of "financial stress" faced by service providers such as Bharti Airtel and Vodafone-Idea and suggest measures to mitigate them, sources in the Department of Telecommunications (DoT) said.

The panel, which will comprise of secretaries to the ministries of finance, law, and telecom, has been asked to look at the demands of telecom service providers (TSPs) for deferment of payments they had promised for the spectrum won through auction as well as consider lowering airwave usage charge, PTI reported.

 Vodafone Idea, Airtel shares jump up to 8.5% amid govt move to set up panel to mitigate telecom financial stress

Representative image. Reuters

While older TSPs such as Bharti Airtel and Vodafone-Idea have been talking of financial stress ever since they faced intense competition from free voice and dirt-cheap data from newcomer Reliance Jio, the matter has assumed greater importance after the 24 October judgment of the Supreme Court.

Shares of Bharti Airtel on Tuesday fell over 3 percent after the company deferred the September quarter result announcement till 14  November due to the adjusted gross revenue (AGR) issue.

Sources said telecom tycoon Sunil Bharti Mittal first met Prasad and then Telecom Secretary Anshu Prakash, apparently over the liability that arises from the Supreme Court upholding government's view on how revenues should be calculated for sharing of statutory dues.

Govt sets up panel to explore financial bailout

The government has constituted a committee of secretaries to explore a financial bailout package for the telecom sector by lowering spectrum charges as well as ending the era of free mobile phone calls and dirt cheap data as companies look at the government for avoiding payment of thousands of crores of rupees in overdue statutory levies. 

The Committee of Secretaries, headed by Cabinet Secretary Rajiv Gauba, has been asked to examine "all aspects" of "financial stress" faced by service providers such as Bharti Airtel and Vodafone-Idea and suggest measures to mitigate them, sources in the Department of Telecommunications (DoT) said.   

The panel, which will comprise secretaries to the ministries of finance, law, and telecom, has been asked to look at the demands of telecom service providers (TSPs) for deferment of payments they had promised for the spectrum won through auction as well as consider lowering airwave usage charge.

--With PTI inputs

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Updated Date: Oct 30, 2019 12:10:02 IST