Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.
Stock Analysis, IPO, Mutual Funds, Bonds & More

Airtel, Vodafone Idea fall for second day; here’s what experts say

On the other hand, Jio’s parent Reliance Industries was up 1.63 per cent at Rs 1,562.|
Updated: Nov 22, 2019, 04.01 PM IST
Jio’s parent Reliance Industries was up 1.63 per cent at Rs 1,562 at around 9.55 am.
NEW DELHI: Telecom firms Bharti Airtel and Vodafone Idea extended their losses for the second straight session on Friday. The recent relief by the government on Wednesday failed to lift sentiment.

The Cabinet on Wednesday cleared a two-year moratorium on spectrum payments, which will give immediate relief of more than Rs 42,000 crore to mobile phone companies.

Vodafone Idea closed 1.20 per cent down at Rs 6.56, while Bharti Airtel closed 1.23 per cent lower at Rs 421. Both of these companies have been struggling with high debt and huge losses amid brutal competition with competitor Reliance Jio.

Commenting on the telecom sector, AK Prabhakar, Head of Research, IDBI Capital Markets said, “The government proposal is just a deferment of payment. AQR waiver only will be lifeline for telecom.”

Vodafone Idea and Bharti Airtel had rallied up to 150 per cent after Finance Minister Nirmala Sitharaman said the government doesn’t want any telecom company to shut operations.

Vipula Sharma, Director-Ratings, Brickwork Ratings said, “The Finance Minister announced that the cabinet has approved deferment of the spectrum dues for FY21 and FY22, although the interest as stipulated in the terms of the assignment will be charged as it is. This announcement is expected to improve the cash flows for the telecom players but it will not have a net benefit on their balance sheet as they have to pay the fees along with interest charges after two years.”

Sharma further added that for two large telecom players, the stress on the immediate liquidity will ease to the extent of nearly Rs 42,000 crore. However, it is unlikely to have an impact on the overall sectors financial health as the leverage on the balance sheet is expected to continue to remain high.

Vodafone Idea cracked 6 per cent on BSE on Thursday, while Bharti Airtel slid 2.50 per cent to Rs 426.25.
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links

Follow us on

Download et app

Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service