The government announced a relief package that includes a four-year moratorium on telecom businesses paying statutory dues and 100% foreign investment under the automatic method.
Companies like Vodafone Idea, and Bharti Airtel, which owes crores of rupees in unprovisioned statutory dues, are expected to benefit from the decision.
Kumar Mangalam Birla, who resigned as chairman of the debt-laden Vodafone Idea, termed the reform measures "pathbreaking" that will go a long way in unshackling the telecom sector.
"The pathbreaking reforms announced by the government today will go a long way in unshackling the telecom sector. These reforms demonstrate the government's firm commitment to ensuring healthy growth of the industry," said Mr. Birla in a statement.
"The measures also reflect the decisiveness of the Prime Minister, the Telecom Minister, and the government to address long-standing issues. These reforms will bring alive the digital aspirations of 1.3 billion people and accelerate India's journey to be a digitally powered economy as envisaged by our Honorable Prime Minister."
The Cabinet has approved the removal of the penalty on dues to be paid to the government prospectively and the inclusion of sole revenues derived from telecom services in the adjusted gross revenue.
Sunil Bharti Mittal-led Bharti Airtel welcomed the path-breaking policy directions and interventions announced by the Government to support the telecom industry that has been battered by unprecedented stress, high debt, and low return on investments.
"We congratulate and thank the Government, who under the decisive leadership of the Hon'ble Prime Minister Shri Narendra Modi, has undertaken these seminal reforms to lift an industry that's at the core of his Digital India vision. The latest reforms ensure that the industry is able to invest fearlessly and support India's digital ambitions. We also compliment the Hon'ble Minister of Communications and the Hon'ble Finance Minister for their leadership and support," said Mr. Mittal.
"Bharti Airtel is fully committed to respond to the call by the Hon'ble Prime Minister to invest in and accelerate India's growth. What lies ahead is a once in a lifetime opportunity to build the digital infrastructure that is a catalyst for the digital aspirations of over one billion Indians," he added.
The reform package heralds a new dawn for the Indian telecom industry and will catalyze explosive growth of this vital sector. More importantly, it paves the way for a sustainable three private plus one state-owned telecom operator structure to serve a large market like India.
These bold initiatives are reminiscent of the decisions taken by the NDA Government in 1999 when the telecom sector was at a crossroads, which resulted in an era of affordable mobile services for all Indians.
Reliance Industries chairman Mukesh Ambani lauding the reforms, said, "Telecom sector is one the prime movers of the economy and the key enabler for making India a Digital Society, I welcome the Government of India's announcement of reforms and relief measures that will enable the industry to achieve the goals of Digital India. I thank Hon. Prime Minister for this bold initiative."
Jio heartily welcomes the reforms and relief package announced by the Government of India, as these are a timely step towards strengthening India's telecom sector, said Reliance Industries telco arm in a statement.
Vodafone CEO Nick Read termed it as a 'constructive initiative' by the government.
"We commend the resolve shown by the Government of India, under PM Modi's leadership, to find a comprehensive solution that would support a competitive and sustainable telecom sector in India. Although the sector has struggled for many years, we expect that the Government's constructive initiative announced today--along with the continued strong support of the Telecom Minister and Finance Minister--will be the beginning of a new era for India's digital ambitions and for VI's continued contribution to creating an inclusive and sustainable digital society to the benefit of all citizens."
India's digital economy has entered a phase of exponential growth, with digital solutions contributing to fast and inclusive growth by bringing more and more people online. India has the potential to become one of the most significant digital ecosystems globally as the country moves towards achieving the $5 trillion GDP goal set by the Government.
Next-generation telecom networks with technologies such as 5G will be the spine that will support India's digital ecosystem and spur economic growth. A healthy telecom industry will also spur innovation and investments in allied industries like network equipment, smartphones, data centers, etc., and help create many jobs and contribute to India's Atmanirbhar vision, according to Bharti Airtel.
Shares of Vodafone Idea, Bharti Airtel, and Reliance Industries closed in Green.
Vodafone Idea shares gained 2.86% to close at Rs 8.93, while Bharti Airtel shares gained 4.53% to close at Rs 725.55 in a firm Mumbai market on Wednesday. Reliance Industries shares closed up marginally 0.45% at Rs 2378.95, valuing the company at Rs 15,08,121.8 crore, India's most valued.