Cabinet announces AGR breather: Telecom shares spurt - Airtel jumps 6%, Vodafone Idea soars 7%
As the government on Wednesday announced a breather to the telecom sector, the shares of Bharti Airtel and cash-strapped Vodafone Idea ended on a higher note. The former jumped over 4.5 per cent to Rs 725.55 per share, while the latter grew almost 3 per cent to Rs 8.93 per cent on the BSE.
As the government on Wednesday announced a breather to the telecom sector, the shares of Bharti Airtel and cash-strapped Vodafone Idea ended on a higher note. The former jumped over 4.5 per cent to Rs 725.55 per share, while the latter grew almost 3 per cent to Rs 8.93 per cent on the BSE.
The cabinet today cleared 9 structural reforms and 5 process reforms to change the framework of the telecom sector. The government in this regard has rationalised the Adjusted Gross Revenue (AGR) definition to exclude non-telecom revenues, and approved 4-year moratorium on telecom dues.
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Hitting a new life high intraday today, Bharti Airtel stock jumped almost 6 per cent to Rs 734.95 per share, the counter for the first time breached Rs 700-mark and had also hit Rs 4 lakh crore mark, surpassing the India’s largest lender SBI market capitalisation on the BSE.
Similarly, the most distressed telecom player Vodafone Idea to jumped over 7 per cent intraday to Rs 9.3 per share on the BSE, as compared to record high closing S&P BSE Sensex, up 0.8 per cent.
In apparent analyst view, Geojit Financial Services Chief Investment Strategist Dr. V K Vijayakumar says, “A four-year moratorium on dues of the telecom sector which covers AGR, spectrum dues and interest payment will bring big relief to the cash-strapped sector.”
This is positive for banks, too, since banks' exposure too will decline significantly. 100 per cent FDI (Foreign Direct Investment) in telecom and redefinition of AGR excluding non-core revenue are welcome steps that can stimulate investment in the industry, Geojit Financial Services analyst adds.
The government earlier in cabinet briefing has also approved 100 per cent FDI in telecom sector through automatic route on Wednesday.
The shares of Bharti Airtel jumped over 10 per cent in the last five sessions while, the Vodafone Idea stock has spurted around 53 per cent alone in September amid the government’s relief measures announcement.
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