Stocks

Bharti Airtel records fresh highs as telecom stocks gain on govt nod to relief package

Our Bureau Mumbai | Updated on September 15, 2021

A Bharti Airtel advertisement board   -  REUTERS

The shares of Bharti Airtel recorded fresh highs on Wednesday, surpassing the ₹4 lakh crore mark in market capitalisation during the intraday trade amid the rally in telecom stocks.

Telecom stocks remained in focus through the day as the government approved the much anticipated relief measures for the stressed telecom sector in its Union Cabinet Meeting on Wednesday.

Bharti Airtel closed at ₹725.55 on the BSE, up ₹31.45 or 4.53 per cent. It surpassed the ₹4 lakh crore mark in M-Cap during the day, as it recorded a fresh 52-week high of ₹734.95.

At closing, Airtel's M-Cap stood at ₹3,98,474.04..

Airtel surpassed state-run State Bank of India in terms of M-Cap. At closing SBI's m-cap stood at ₹3,96,118.88.

On the NSE, it closed at ₹727.50, up ₹33.30 or 4.80 per cent. It recorded a new 52-week high of 734.95.

AGR liability

The government on Wednesday approved a relief package for the telecom sector in a bid to help companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues.

Measures approved by the Cabinet include a 4-year moratorium on AGR dues, rationalising the definition of AGR, taking out all non-telecom revenue will be taken out of AGR dues calculation and allowing 100 per cent FDI in telecom via automatic route.

Airtel has AGR dues of ₹43,000 crore, out of which it has already paid ₹18,004 crore by March 31.

Vodafone Idea, in particular has been in significant financial duress, unable to pay the mounting spectrum dues, adjusted gross revenue payments, and invest enough capex into the upcoming 5G roll-out as well as expansion of the 4G network.

According to experts, the company is in dire need of government support, with mounting dues of ₹1.9 lakh crore, of which ₹1 lakh crore is for deferred spectrum payments and ₹62,000 crore are AGR liability to the government.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "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% FDI in telecom and redefinition of AGR excluding non-core revenue are welcome steps that can stimulate investment in the industry."

Vodafone Idea closed at ₹8.93 on the BSE, up ₹0.24 or 2.76 per cent. On the NSE, it closed at ₹9.05, up ₹0.35 or 4.02 per cent.

Reliance Industries, the parent company of telecom major Jio closed at ₹2378.95 on the BSE, up ₹10.65 or 0.45 per cent. On the NSE, it closed at ₹2,379.40, up ₹10.95 or 0.46 per cent.

Published on September 15, 2021

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