Shares of Vodafone Idea surged as much as four percent in trade on Thursday as concerns over its viability faded amid the company’s fund-raising plans and prospects of a tariff hike.
The telecom company may opt to convert interest from deferred dues into government equity. It could be the first one to raise tariffs and is all set to bring in funds, as per reports.
Read Here | Will Centre’s relief package help battered telecom industry?
Vodafone Idea is confident of reaching a fundraising deal with potential investors, bolstered by the government’s relief package, Ravinder Takkar, chief executive officer of the telecom company had reportedly said.
Vodafone Idea, with net debt of Rs 1.91 trillion and other government dues of Rs 1.68 trillion, had expressed repeated concerns about its ability to stay afloat without government support, as per reports.
The Cabinet last week, approved a relief package for the telecom sector while announcing a moratorium of four years on Adjusted Gross Revenue (AGR) dues. Reacting to this announcement, shares of Vodafone Idea had risen higher in trade.
Read Here | Cabinet approves relief package for telecom sector, announces moratorium of 4 years on AGR dues
Vodafone will invest the cash saved due to the moratorium into expanding its network and participating in 5G auctions instead of repaying debt, a report said.
Analysts had said that the relief package would change the framework of the entire telecom industry, and will help telecom companies to save cash flows while supporting their operations.
Axis Securities believes that the relief package is a welcome step towards strengthening the industry and ensuring the survival of telecom operators as well as maintaining healthy competition for the benefit of customers.
The removal of non-telecom revenues from the definition of AGR and the removal of penalty has been a much-needed change because this will make way for the telecom players to make higher capital investments, the brokerage firm had said.
In a separate report, Vodafone Idea’s CEO said the company will review the terms of its planned fundraise and may drop a plan to monetise assets after last week’s telecom rescue package erased a question mark over its survival.
At 09:45 am, shares of Vodafone Idea were trading 2.6 percent higher at Rs 10.66.Internet Explorer Channel Network