March 14, 2025 02:43 am (IST)
Follow us:
facebook-white sharing button
twitter-white sharing button
instagram-white sharing button
youtube-white sharing button
In a setback for Donald Trump, US judge orders federal agencies to rehire fired workers: Report | 'We will thwart conspiracies hatched by Centre': Revanth Reddy on delimitation exercise | Chennai doctor, his wife along with two sons die by suicide due to huge debt: Cops | Amid language debate, Tamil Nadu drops rupee symbol in state budget | Scientist killed in assault by neighbour over parking argument in Mohali | British woman tourist raped in Delhi hotel by man she befriended on social media | Gold smuggling case: Court restrains media from publishing, telecasting defamatory statements against Ranya Rao | Trump warns Putin of 'devastating' financial impacts if Russia blocks Ukraine ceasefire | 'People are going to Russia right now as we speak: Donald Trump on Ukraine war ceasefire talks | Pakistani army claims to have freed all hostages in passenger train siege; 28 personnel killed
Vodafone
Image credit: UNI

Indian Cabinet clears relief package for telcos, lifeline for crisis-hit Vodafone Idea

| @indiablooms | Sep 15, 2021, at 09:41 pm

New Delhi/UNI: Offering a lifeline to crisis-ridden Vodafone Idea and also respite to other private telecom operators, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday cleared the much-awaited relief package for the sector which includes moratorium on payment of spectrum dues.

"A four year moratorium has been given for all dues of telecom service providers," Telecom Minister Ashwini Vaishnaw said on Wednesday.

"It is also important to save government revenue, so an interest on the moratorium will have to be paid. This will reduce the stress of cash flow in the industry," he said announcing a series of structural reforms in the telecom sector.

Asked about the total cost of the package, the minister said it was "revenue neutral" for the government.

"We have to look at this reform from the perspective of this industry, the reforms are structural and they are going to make a difference. It is going to give a sustainable growth to the industry. The package is revenue neutral to the government, there is no number to the amount of the package," he said.

Among the reforms, the Cabinet also approved 100 per cent FDI through automatic route in the telecom sector. The minister said while 100 per cent FDI was allowed earlier as well, only 49 per cent could come through the automatic route.

Among the three private telecom players, Vodafone Idea Ltd (VIL) is facing an existential crisis and their closure would mean duopoly in the industry besides a considerable bearing on its employees, subscribers, banks and associated industries.

"Given the precarious position of the balance sheet of VIL, material external support (primarily Government) might be necessary. The support can be in the form of deferment of spectrum dues, reduction in levies, reduction in interest rates, etc," the research and rating firm ICRA had said on September 6 in a note.

Kumar Mangalam Birla, ex-Chairman of Vodafone Idea, had earlier written to the Cabinet Secretary offering his stake in the company to the government or any entity approved by it for free. He later quit as Chairman of the debt-laden telco.

Vodafone Idea had a total debt of Rs 1,90,000 crore as of June 30 which includes deferred spectrum payment obligations of 1,06,000 crore and an adjusted gross revenue liability of Rs 62,180 crore.

Another major player Bharti Airtel has also been under financial pressure. The company Chairman Sunil Mittal recently said that there is “tremendous stress in the telecom sector” and tariffs need to go up soon.

“To say telecom industry is in a bit of trouble is actually an understatement. It is in under tremendous amount of stress," Mittal had said during an investor call.

The telecom industry has been facing headwinds ever since Mukesh Ambani-led Jio launched operations and unleashed a tariff war that resulted in revenue and profits for telcos. The Adjusted Gross Revenue (AGR) penalty added to the woes of the industry.

Investors appeared to be giving a thumbs-up to the telecom relief package. Vodafone Idea shares were trading 2.30 per cent higher at Rs 8.89 a piece on BSE at 2PM. Bharti Airtel shares were trading 5.66 per cent higher on BSE for Rs 733.10 a piece at 2PM. Reliance Industries, the parent of Jio, shares were also in the green.

Support Our Journalism

We cannot do without you.. your contribution supports unbiased journalism

IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.

Support objective journalism for a small contribution.
Related Videos
FM Nirmala Sitharaman presents Budget 2025 Feb 01, 2025, at 03:45 pm
Nirmala Sitharaman on Budget 2024 Jul 23, 2024, at 09:30 pm
PM Modi on Budget 2024 Jul 23, 2024, at 09:30 pm