India’s federal cabinet did not accept proposals on Wednesday to provide financial relief to the country’s telecommunications sector, which is struggling with cash, a government source said.
The cabinet was expected to make a decision on the so-called aid package for the telecommunications industry, which would have helped all wireless operators, but especially the battered Vodafone Idea.
The source did not specify why the proposal was not discussed.
Shares in Vodafone Idea were down 1.2 percent, while Bharti Airtel dropped 0.2 percent at 0751 GMT (13:21 IST) on news that the cabinet was postponing industry support measures.
Both stocks rose on Tuesday in hopes of government help.
India’s telecommunications industry was brought down by Reliance Jio Infocomm, controlled by billionaire tycoon Mukesh Ambani, when it entered the market in late 2016 with free voice and low-priced data plans.
Jio also pushed several rivals out of the market, while others – such as Vodafone UK’s Indian unit and the local Idea Cellular – were forced to regroup.
The industry has also been hit by a Supreme Court ruling last year that forces operators Bharti Airtel and Vodafone Idea to give in to a government request for long-contested fees.
Vodafone Idea paid the government Rs. 7,854 million in telecom fees, the regulatory records show, but I still owe around Rs. 50,000 crores.
Bharti Airtel said it paid fees estimated at Rs. 18,000 crores, but government figures show he owes more Rs. 25,976 crores.
Vodafone, which has a net debt of Rs. 1,91,000 crores, had already raised serious concerns about its ability to stay afloat without government help, and its billionaire non-executive chairman stepped down last month.
© Thomson Reuters 2021