Here's Why Vodafone Idea Spiked by 6% on Wednesday

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Here's Why Vodafone Idea Spiked by 6% on Wednesday
Credit: © Reuters.

By Malvika Gurung

Investing.com -- The Department of Telecommunications (DoT) announced a relief package in September for debt-laden players in the Indian telecom sector.

The relief package involves a four-year moratorium on AGR and spectrum payment dues, reduced bank guarantees, and removing SUC for airwaves that will be acquired in future auctions, among others.

The government department recently reached out to telecom service providers to enquire if they would opt for a four-year moratorium on spectrum payment and AGR payment and has informed them to revert on the same by October 29.

Vodafone Idea (NS: VODA ) reverted with confirmation on deferring its spectrum auction instalments for four years on Wednesday. It has also confirmed to send in its decision for accepting the moratorium on AGR payment at a later date.

Vi became the first telecom company to respond to the telecom ministry’s relief program. The cash-strapped telco’s shares jumped by 6% to Rs 10.60 a piece, as the market closed on Wednesday.

"We wish to inform you that the Board of Directors of the Company has approved the exercise of the option of deferment of the Company’s spectrum auction instalments for a period of 4 years (October 2021 to September 2025),” informed the telco.

The ministry has also informed telcos that they can choose to convert their principal statutory dues during the deferred payment to equity when their moratorium period ends. Telcos need to send in their decisions in 3 months.

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