Govt extends telecoms gear quota for state-run ITI

Sends shares of ITI higher by as much as 13%

The cabinet has extended until September a requirement for its two state telecommunication carriers to buy part of their equipment from state-run telecoms gear maker ITI Ltd , sending the company's shares as much as 13% higher.

Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd -- the two state carriers -- will have to reserve 20% of their network rollout contracts for ITI, a government statement said, in a move aimed to prop up the money-losing gear maker.

For products made by ITI, the two carriers must buy at least 30% of their requirement from the company.

"This will enable ITI to survive in the competitive environment," the statement issued after a meeting of the cabinet said.

 

Most of India's telecommunication gear are sourced from foreign manufacturers given the limited local manufacturing capability.

By 2:38 p.m., ITI shares were trading 6.7% higher at Rs 16.85 in a Mumbai market that was up 1.2%.