The Union Cabinet on Wednesday approved a telecom relief package with relaxation in terms of adjusted gross revenue (AGR) payment, sources said.
According to people in the know, the Cabinet has approved the moratorium of four years for AGR dues. The details are expected to be spelt out by Union Telecom Minister Ashwini Vaishnaw later in the afternoon.
The move will be most beneficial for the stress-ridden Vodafone Idea. Shares of Vodafone Idea surged over 2 per cent on hopes of the relief package, while those of Bharti Airtel soared over 5 per cent.
The government has been in talks with several stakeholders, including banks, for a package for the sector amid the concerns of a possible duopoly in the Indian telecom sector if Vodafone Idea shuts.
Earlier in the month, Vodafone Idea’s former Chairman, Kumar Mangalam Birla met Union Communications Minister Ashwini Vaishnaw.
During the meeting on September 1, Birla and Vaishnaw discussed about the health of the sector and the urgent need for government intervention.
On August 4, the board of Vodafone Idea accepted the request of Birla to step down as the Non-Executive Director and Non-Executive Chairman of the Board.
Days before Birla’s resignation as the Chairman, it became public that he had written to the government that he is willing to hand over his stake in the debt-ridden company to government entities in a bid to keep the company operational.
In a letter to Cabinet Secretary Rajiv Gauba on June 7, Birla said that, with a “sense of duty” towards 27 crore Indians connected with Vodafone Idea, he is willing to hand over his stake to public Sector Unit (PSU), a government entity or any domestic financial entity, or any other entity that the government may consider worthy of keeping the company as a going concern.
In the letter, Birla sought clarity on adjusted gross revenue (AGR), adequate moratorium on spectrum dues and floor pricing, adding that without immediate and active government support, VIL’s operations will be at an “irretrievable point of collapse”.