“Cabinet approved the proposals put forward by the department of telecom,” a person familiar with the matter told ET.
In afternoon trade on Wednesday, the
shares were trading 1.6% higher at Rs8.83 while the stock was up 5.1% at Rs729.90, on the BSE
The package likely includes a four-year moratorium on AGR and spectrum payments apart from a reduction in the spectrum usage charge (SUC) prospectively, among measures to improve the health of the debt-laden sector and retain a three-private player market.
Other crucial proposals include a reduction in bank guarantees, redefining AGR to exclude ‘non-telecom’ items, again prospectively, and allowing telcos to surrender unused spectrum.
According to sources, the government has allowed telcos to convert a part of their statutory dues into equity right away.
Also, in four years’ time, if any company is able to improve its operational performance but is hobbled only due to the payment of dues, the government then would have the option of stepping in and converting the principle amount of this into equity.
In its April-June earnings report, Vodafone Idea said total gross debt as of June 30 was Rs 1.92 lakh crore, comprising deferred spectrum payment obligations of Rs 1.06 lakh crore and AGR liability of Rs 62,180 crore that are due to the government, and debt from banks and financial institutions of Rs 23,400 crore. Cash and cash equivalents were Rs. 920 crore and net debt stood at Rs. 1.91 lakh crore.
