Categories: Business

Vodafone’s idea, lenders jumped after Govt nodded into a telecommunications package

Bengaluru: Shares Vodafone Ideas Ltd jumped nearly 20% and banks with exposure to telecommunications companies soared on Thursday, a day after the Unino Cabinet approved a assistance package for a problematic sector.
The four-year moratorium on airwaves payments because the government and raising air wave tenure held by the company is part of the package, along with changes in the controversial definition of adjusted gross income (AGR) to exclude non-telecommunications revenue.
Analysts said that these steps could restore the idea of ​​telecommunications markets three players for now, but it did not provide a long-term solution.
“For long-term sustainability, Vodafone’s idea not only requires infusion of capital, but the increase in tariffs is considerable for pre-paid 4G customers.
In this absence, the industry can slip into the duopoly,” said Pranaav Kshatriya, vice president.
Institutional equity at Edelweiss Securities.
The problem for the telecommunications sector, which has been disturbed by the entry of Mukesh Reliance Reliance Jio billionaire and forces some rivals from the market, has been exacerbated by major contributions that must be paid to the government.
The idea of ​​Vodafone, the combination of Indian units from the British Vodafone group and the idea of ​​domestic telecommunications telecommunications companies, alone still owed the government around Rs 50,000 Crore ($ 6.81 billion).
The company’s shares rose 20% to the highest since June 29, while rival Bharti Airtel rose to 1.4% before sheding the initial increase.
The first IDFC bank, yes bank and indusin bank, which, according to nomura, has exposure to Vodafone ideas at 3%, respectively 2.4% and 1.7% of their loan books, up as much as 5% and 13%.
Analysts say the default risk is mostly taken in the medium term.

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