Telecom shares were in demand on September 15 and jumped up to 5% despite the Union Cabinet approving a relief package for the sector.
Bharti Airtel jumped 4.53% and Vodafone Idea 2.76% on the BSE.
Tata Teleservices (Maharashtra) shares rose 4.94% and Tata Communications gained 1.38%.
In big bang reforms, the Union Cabinet on Wednesday approved a relief package for the telecom sector that includes allowing 100% foreign investment through the automatic route along with a four-year moratorium on payment of statutory dues by telecom companies. .
Briefing reporters about the decisions taken by the cabinet, Telecom Minister Ashwini Vaishnav said that nine structural reforms were approved for the telecom sector.
The definition of Adjusted Gross Revenue (AGR), which was a major cause of stress in the sector, has been rationalized by excluding non-telecom revenues of telecom companies.
AGR refers to the revenue which is considered for payment of statutory dues.
The minister said that 100% foreign direct investment (foreign direct investment) in telecom through the automatic route was approved by the cabinet.
He said the measures approved were a moratorium of four years on unpaid dues, AGR and spectrum dues.
These measures are expected to ease the cash flow issues being faced by some players in the industry.
VK said, “The four-year moratorium on telecom sector dues, which includes AGR, spectrum dues and interest payments, will give a major relief to the cash-strapped sector. This is also positive for banks as banks also risk exposure. There will be a considerable drop.” Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
He said 100% FDI in telecom and redefining AGR excluding non-core revenue are welcome steps which can encourage investment in the industry.
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