Why Vi, MTNL, other telecom stocks surged by 19% today
What's the story
Telecom stocks in India soared during today's trading session, with some rising as much as 19%. The surge was mainly fueled by media reports indicating that the Indian government has approved a proposal to waive bank guarantees (BG) for spectrum purchases made up to 2022. The waiver is likely to offer major relief to telecom companies, which together owe over ₹30,000 crore in BGs to the government.
Stock performance
Vodafone Idea and Tata Teleservices lead the surge
Vodafone Idea's shares jumped an impressive 18.6% to hit a day's high of ₹8.28, while Tata Teleservices surged 13% to touch ₹78.11. Other telecom stocks also witnessed strong gains with Indus Towers rising 5.5%, Bharti Hexacom 4.5%, and Tata Teleservices and Bharti Airtel gaining 1.8% and 1.6% respectively.
Financial relief
Vodafone Idea to benefit most from BG waiver
The Department of Telecommunications (DoT) has approved the waiver of BGs for spectrum purchases. The move comes as a major relief for Vodafone Idea, which owes over ₹24,000 crore in BGs and has been struggling to meet its financial obligations. The company had failed to pay its second BG installment of around ₹350 crore due on November 1, for spectrum bought in a 2012 auction.