Vodafone Idea's total dues over Rs 2 lakh crore, but value of its spectrum just Rs 98,000 crore
Whichever way the adjusted gross revenue (AGR) case concerning telcos goes, the ultimate loser will be the government. This is because the value of spectrum which is with the operators currently, their main asset – of course, on lease from the government – has diminished.
If an operator like Vodafone Idea does not get to pay its AGR dues of Rs 58,000 crore in deferred installments of 15-20 years as it has sought, it may have to file for bankruptcy and then the government stands to lose over Rs 2 lakh crore. The value of liberalised spectrum with Vodafone Idea currently – for the balance licence period – stands at around Rs 98,206 crore based on the latest reserve price worked out by the Telecom Regulatory Authority of India (Trai) for the next round of auctions.
Vodafone Idea owes the department of telecommunications (DoT) around Rs 2,45,934 crore if all of its dues are taken into account. Its dues on account of deferred installments for spectrum it bought in various auctions is Rs 1,82,222 crore. This amount is payable till 2036. Further, its dues on account of one-time spectrum charge (OTSC) is around Rs 5,712 crore. Add to this the Rs 58,000 crore of AGR dues.
The Supreme Court has reserved its order regarding the timeline in which the company should pay this.
The Trai and the DoT have largely been at fault for the situation where the government cannot cover its dues with the spectrum the operators have. Even if the DoT gets back the spectrum from insolvent telecom operators like Reliance Communications and Aircel, as it is arguing in the SC, it won’t be able to recover its AGR dues. For instance, the AGR dues of RCom is around Rs 26,000 crore and the value of its spectrum based on its remaining licence period is Rs 12,983 crore.
imilarly, the AGR dues of Aircel is Rs 12,389 crore and the value of its spectrum is Rs 4,965 crore. Even if DoT gets back the spectrum it will have to put it up for auction to recover its dues. Here, since the timing of auctions which remain uncertain because of the poor financial health of the operators, the value of spectrum would only further diminish.
This kind of mismatch is because the Trai and DoT followed a practice of raising spectrum price for every year taking the final price of previous auctions as the base price, which led to unnatural rise in prices. In contrast to today’s scenario, the operators needed spectrum. To make up for the astronomically high prices, DoT allowed operators to pay through deferred installments while keeping the net present value intact. As a result, today the dues owed by the operators is much higher than the value of their spectrum.