Cabinet approves crucial relief package for stressed telecom sector

The Union Cabinet has approved a crucial plan to provide relief to the ailing telecom sector on Wednesday. The relief package will provide much-needed relief to telecom companies like Vodafone Idea and Bharti Airtel.

The development has been confirmed by a senior government official who spoke to news agency Reuters. More details about the telecom relief package will be shared during a press briefing scheduled later in the day.

As per earlier reports, the relief package is likely to include a four-year moratorium on adjusted gross revenue (AGR) related dues besides allowing telecom firms to surrender unused spectrum. The relief package will also include some other measures that will further ease the burden on telcos.

The relief package will primarily provide relief to Vodafone Idea, which is on the brink of going bankrupt. A moratorium on AGR-related dues will offer space to the cash-strapped company to improve its business and clear dues over a longer period.

Read | Govt explores ways to extend AGR dues repayment timeline for ailing telcos

The relief package will benefit both Vodafone Idea and Bharti Airtel as the telcos have to repay the biggest chunk of AGR dues. While Bharti Airtel’s financial position is much better than Vodafone Idea, the relief measure will help the company’s future plans to compete with Reliance Jio.

Decoded | Importance of rescuing cash-strapped Vodafone Idea

With the telecom relief package, the government main intention seems to be to rescue Vodafone Idea as it has acknowledged that a duopoly in the crucial sector could ultimately hurt customers.

Soon after the report indicated that the Union Cabinet had cleared the telecom relief package, shares of telecom firms including Vodafone Idea and Bharti Airtel rose. Vodafone Idea shares rose 2.65 per cent on the Bombay Stock Exchange, while Bharti Airtel stock surged over 5 per cent.

Meanwhile, it has also come to light the Union Cabinet has approved the production-linked incentive (PLI) scheme for the auto sector worth Rs 26,000 crore.

Also Read | Relief package likely for stressed telecom sector: Here’s all you need to know

Source – India Today