BENGALURU Reuters - Shares of Vodafone Idea Ltd have surged nearly 20% on Thursday while banks with exposure to embattled telecom firm also climbed, a day after the federal cabinet approved a relief package for the cash-strapped sector.
The relief package includes a four year moratorium on airwave payments due to the government, raising the tenure of airwaves held by firms to 30 years from 20 and total sharing of spectrum between carriers.
The government will also change the contentious formula of adjusted gross revenue AGR to count only telecom revenue after long holding that even companies' non-telecoms revenue was a part of AGR - a bill of roughly $13 billion for wireless carriers.
The dues had compounded troubles in a sector that was already reeling from the entry of billionaire Mukesh Ambani's Reliance Jio, sparking a price war that forced some rivals out of market and turned profits into losses.
Bharti Airtel shares rose 20 % to their highest since 29 June, while Vodafone Idea climbed to 1.4% before shedding early gains.
IDFC First Bank, Yes Bank and IndusInd Bank, whose respective exposures with Vodafone Idea of 3%, 2.4% and 1.7% of their loans books according to Nomura, climbed between 2% and 8%.