Telecom stocks surge on reports about Cabinet nod to AGR relief

Vodafone Idea stock surged over 30% and Airtel jumped over 4% on reports that the Union Cabinet has approved a proposal for a relief package that will help operators reeling under the adjusted gross revenue (AGR) crisis.

In afternoon trade, Vodafone Idea's stocks surged by 30.24% at Rs 5.47 a share while rival Bharti Airtel's shares were up by 4.17% and traded at Rs 484.35 on the BSE. Tata Teleservices was up by 2.22% at Rs 2.30 a piece.

The shares were up on the day when trading was halted for 45 minutes in the morning after index fell by 10% on coronavirus fears.

Reports on Friday said that Cabinet has approved a relief package for the sector which could include the option of AGR payment over several years. However, no specific details of the package were immediately known.

The industry under a debt of Rs 7 lakh crore has been requesting the Cabinet for a relief package which include staggering interest and penalties of the AGR dues over several years and reducing some non-AGR dues such as licence fees and spectrum usage charges. Vodafone Idea, specifically, has said it will be forced to shut down unless it gets some relief on its AGR dues.

The turmoil started when Supreme Court ruled on October 24 that AGR includes non-core items, leaving 15 telcos facing dues of more than Rs 1.64 lakh crore. Only three of these 15 — Bharti Airtel, Reliance Jio Infocomm and Vodafone Idea— are currently providing telecom services. Vodafone India and Idea Cellular merged in August 2018 to form Vodafone Idea.

So far, Vodafone Idea has paid about Rs 3,500 crore of its DoT-estimated Rs 53,000 crore dues, while Airtel has paid Rs 18,004 crore of the government estimated Rs37,000 crore liabilities. TTSL has submitted Rs 4,197 crore as AGR dues, as against the government's nearly Rs14,000 crore estimate.

On their own, Vodafone Idea has pegged its AGR dues at over Rs21,500 crore, Airtel at Rs13,0004 crore and Tata Teleservices, at 2,197 crore.