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ICICI Securities Report
The government has announced the much-awaited telecom relief package with four years of moratorium on adjusted gross revenue and spectrum dues which significantly reduce payment burden for Vodafone Idea Ltd. by Rs 252 billion per annum based on our calculation.
Further, government has the option to convert deferred dues, and also annual interest on deferred payment into equities.
In worst case, we believe this could pave way for Vodafone Idea to become majority owned by the government, thus, increasing going concern visibility.
We believe tariff hike should happen sooner as relief package entirely does not address Vodafone Idea’s cashflow requirements, and even for raising funds, tariff hike remains critical.
Bharti Airtel Ltd. and Reliance Jio do not have much to gain from the relief pack, but improvement in spectrum norms will benefit during 5G spectrum auction.
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