Telecom Shares Including Vodafone Idea, MTNL Register Strong Rally In Stock Market. Here's Why

As markets opened, shares of Vodafone Idea jumped 15 per cent surpassing Rs 8 apiece, while MTNL shares soared almost 9 per cent to reach Rs 51.45 per stock in the market

Media reports said that this surge followed the Union Cabinet giving its approval for waiver of bank guarantees for telecom operators on spectrum bought before 2022

Source : Unsplash

The stock market on Tuesday witnessed a major rally amongst telecom stocks. As the trading session began on November 26, the shares of telecom players such as Vodafone Idea, MTNL, etc started gaining momentum.

As markets opened, shares of Vodafone Idea jumped 15 per cent surpassing Rs 8 apiece, while MTNL shares soared almost 9 per cent to reach Rs 51.45 per stock in the market. Bharti Airtel also recorded mild gains in the stock market as its shares inched up by 0.30 per cent to trade at Rs 1,583 apiece.

This surge followed the Union Cabinet giving its approval for waiver of bank guarantees for telecom operators on spectrum bought before 2022, reported Moneycontrol citing sources.

The decision provided a relief to telecom operators, specially Vodafone Idea which owes the government more than Rs 24,700 crore in bank guarantees (BG), the news agency stated.

As of 11:47 AM, the shares of MTNL climbed over 6 per cent to reach Rs 50.14 apiece, while Vodafone Idea shares jumped more than 13 per cent and stood at Rs 7.89 apiece in the market.

The waiver from the government came as a huge relief for the telecom companies and the overall financial burden the sector is going through.

The waiver from the government came as a huge relief for the telecom companies and the overall financial burden the sector is going through. Collectively, telecom companies in India including Airtel and VI, owe more than Rs 30,000 crore in bank guarantee obligations. The Cellular Operators Association of India (COAI) reportedly urged the authorities to revoke the bank guarantee requirements for telecom players on spectrum acquired before 2022, the report noted.

This waiver is expected to help improve the cash flow for these firms and boost greater network investment.