Telecom Relief Package Might Help Vodafone-Idea Balance Sheet: Here's How

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The cash flow and balance sheet of Vodafone-Idea are expected to be improved due to the relief package introduced by the DoT. Notably, the Department of Telecommunication has introduced a new package for the sector to improve its overall health.

 
Telecom Relief Package Might Help Vodafone-Idea Balance Sheet: Here's

The relief package include a moratorium on statutory dues of telcos, 100 percent of foreign direct investment, and removing non-telecom items from adjusted gross revenue to attract global investors.

"My reading is that the government announcement will de-stress Vodafone Idea's balance sheet, especially the four-year moratorium period will give interim cash relief," Vi banker was quoted by ET. Earlier, the banker said that the telecom ministry is not working to retain three telecom operators in the country.

For the unaware, Vodafone-Idea has to clear Rs. 1.92 lakh crores of dues, where telecom operator needs to clear Rs. 18,000 crores in the next year. However, there are chances the reforms are expected to help Reliance Jio and Airtel a lot. In addition, Vodafone-Idea lenders received some relief from the package.

"Huge reduction in BG requirements (80 percent) against license fee and other similar levies. No requirements for multiple BGs in different licensed service areas regions in the country. Instead, one BG will be enough," said a government after the telecom minister introduced the package.

Airtel And Reliance Jio Will Get Cash Relief

It is worth noting that Reliance Jio and Airtel will be benefited from the relief package as their financial conditions are much better than Vodafone-Idea. In addition, both telecom operators are looking for a 5G airwaves sale in the upcoming auction.

Similarly, Nomura Group believes that both Airtel and Reliance Jio will get Rs. 11,900 crores and Rs. 4,300 crores cash flow from the moratorium. The firm also believes that if they avail the benefit from the relief package, both telecom operators can invest in the 5G network easily.

 

Telecom operators are happy with the new relief package Notably, all telecom operators are also conducting 5G trials in the country, which is why we believe that reforms come at the right time. However, we have to wait and see that how they will utilize the benefit introduced by the Department of Telecommunication.

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