Bharti Airtel can pay Rs 11,476 crore of dues after two years but has to pay Rs 43,318 crore immediately; for Vodafone Idea the numbers are Rs 23,920 crore and Rs 49,155 crore.
Stocks of telecom firm Vodafone Idea nearly doubled over the last four sessions – Bharti Airtel jumped around 20% – in the hope of a revival package, but the government dashed investor hopes with the cabinet clearing, on Wednesday, a package that offered only liquidity relief. No telco will have to pay the deferred spectrum dues till 2023 – they have paid 2019 dues, the bank guarantee they have already given will be used for the 2020 dues and no payments need be made over the next two years.
No action was taken in Wednesday’s Cabinet meeting on cutting the 11-13% license/SUC fees that the markets were speculating upon; nor was any relief given on the Rs 1.3 lakh crore dues arising for the entire industry out of the Supreme Court verdict.
The liquidity relief is Rs 11,476 crore for Bharti Airtel, Rs 23,920 crore for Vodafone Idea and Rs 6,670 crore for RJio. The telcos will, though, continue to pay interest costs on the amounts that have been deferred.
Whether the Cabinet decision will mean Vodafone Idea can survive is not clear, but the prospects look a bit better; Vodafone’s global CEO Nick Reed had, last week, hinted at Vodafone Idea shutting down if no relief was available.
With the government making it clear that no relief would be given in the AGR dues that arose out of the Supreme Court decision, Bharti Airtel will have to pay Rs 43,318 crore within the next three months and Vodafone Idea Rs 49,155 crore. Vodafone Idea does not have the cash to make these payments, so it remains to be seen whether the promoters will pump in more money – or whether they can raise more from banks or other sources – now that there is some relief on spectrum dues for another two years.
Bharti Airtel’s debt is Rs 116,000 crore and Vodafone Idea’s Rs 120,000 crore. RJio’s debt is Rs 67,018 crore.
As FE has pointed out earlier, one of the biggest losers of Vodafone Idea shutting would have been the government itself as its chances of getting back its dues would have receded considerably. And if the government went to the insolvency courts, it would have got very little since it is not a financial creditor.
Government revenues from the sector have, in any case, fallen from Rs 70,241 crore in FY17 to Rs 39,345 crore in FY19; the biggest fall in revenues took place because of the fact that there were no new auctions in 2017, 2018, or 2019 as the industry was cash-strapped. Government revenues will be constrained for the next few years as there can be no auctions till the industry’s finances are less precarious.