The federal cabinet of India did not take up proposals for providing financial relief to telecom operators that are cash-strapped, stated a government source. Previously, the cabinet was expected to decide regarding the relief package for the telecom industry today as it will help all wireless carriers, especially Vodafone India, which is struggling of late. However, the same did not happen today, and there is no information regarding why the discussion did not take place.
Bharti Airtel, Vi Faced Disappointment
The shares of Bharti Airtel dropped to 0.2 per cent while that of Vodafone India took a plunge to 1.2 per cent. Eventually, the cabinet was expected to take measures to support the telecom industry. In the hopes of getting help from the government, both stocks rallied on Tuesday.
In 2016, when Reliance Jio Infocomm, led by tycoon billionaire Mukesh Ambani, entered the Indian telecom sector with free voice and aggressively priced data plans. As Jio thrived, it pushed several competitors out of the industry and the ones that are remaining are only a few. Among the rivals, the British telco Vodafone operating in the country joined hands with the homegrown Idea Cellular, thereby forming Vodafone Idea.
Besides this, a Supreme Court ruling came up last year forcing carriers such as Vodafone Idea and Bharti Airtel to give in to the government’s demand for dues. Following the same, Vodafone Idea paid Rs 75.54 billion to the government in regulatory filings show and telecom dues. However, the merged telecom entity still owes as much as Rs 500 billion.
On the other hand, Bharti Airtel stated that it paid dues that are estimated to be Rs 180 billion. However, the government’s figures hint that the telecom entity owes 259.76 billion to the government, and it is unpaid.
For those who are not aware, Vodafone, with a net debt worth Rs 1.91 trillion, was previously praised for its concerns about if it will stay floated sans any government help. Notably, Bharti Airtel’s non-executive chairman stopped stepped down from his position last month. He was a billionaire non-executive chairman of the group.