AGR Judgement Day HIGHLIGHTS: SC allows 10 years for payment of AGR dues; telcos to pay dues on Feb 7 annually

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Updated: September 1, 2020 3:24:35 pm

SC AGR verdict HIGHLIGHTS: The Supreme Court has allowed 10 years for payment of AGR dues. Telecom companies have to pay dues on Feb 7 annually for 10 years

SC Agr live, bharti airtelTelecom companies have to pay AGR dues along with interest and penalty which is estimated to be around Rs 1.6 lakh crore

SC AGR verdict HIGHLIGHTS: The Supreme Court has allowed 10 years for staggered payment of adjusted gross revenue (AGR) dues. The court also observed that the payment of annual instalment to be made payable, otherwise, contempt proceedings will begin. Every year by 7th February, payments have to be made. While on the issue of whether spectrum could be subject to insolvency proceedings, the top court declined to decide and asked NCLAT to decide whether the spectrum of insolvent telecom companies can be sold in insolvency proceedings.  A bench of Justices Arun Mishra, S Abdul Nazeer and MR Shah pronounced the verdict. Telecom companies have to pay AGR dues along with interest and penalty which is estimated to be around Rs 1.6 lakh crore.

Out of Bharti Airtel’s nearly Rs 43,000 crore total dues, the company has paid nearly Rs 18,000 crore, Vodafone Idea has paid a total of Rs 7,854 crore to DoT towards the AGR dues, against its total AGR dues of around Rs 58,000 crore. While, total AGR dues for Tata Teleservices, as per the DoT, stands at Rs 16,789 crore. Out of which the company has Rs 4,197 crore so far.

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Highlights

    14:17 (IST)01 Sep 2020
    Need to watch how telecom operators increase tariffs

    In regards to the spectrum obligation of insolvent companies, the Supreme Court has referred the matter to NCLT. In the worst case, there could be further liability on Reliance Jio and Bharti Airtel who have taken the spectrum from Reliance Communication, Videocon and Aircel. After the Supreme Court verdict the hangover of AGR case is removed and going forward we need to watch how telecom operators increase tariffs: Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities

    14:14 (IST)01 Sep 2020
    SC verdict is not as beneficial to Vodafone Idea as it is to Bharti Airtel

    Impact if any could be positive on any reversal of provision. As per our estimates the company should be generating healthy free cash flows from FY21 onwards and in this context annual AGR payment of ~Rs.4400-4700 cr should not be an issue. We remain quite optimistic on Bharti Airtel with a price target of Rs.710. The Supreme Court verdict is not as beneficial to Vodafone Idea as it is to Bharti Airtel. Vodafone was looking forward for a 20 year payment cycle which has now reduced to 10 years. Out of the total AGR dues of ~Rs.58,000 cr Vodafone Idea has paid only ~Rs.7,900 cr till now. Considering the high annual interest, depreciation and amortization cost the annual AGR dues could put further strain on the cash flows of the company. However, if there is across the board increase in tariffs by the three players then it could provide reprieve to Vodafone Idea in future: Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities

    14:12 (IST)01 Sep 2020
    AGR verdict is quite positive for Bharti Airtel

    The AGR verdict is quite positive for Bharti Airtel as it has got 10 years to pay the spectrum charges out of which it needs to pay only 10% upfront. As per media articles the total dues of Bharti Airtel works to ~Rs.44,000 cr out of which it has already paid ~Rs.18,000 cr. Hence, Bharti has already paid more than the 10% of upfront requirement. Bharti has already provided for ~Rs.47,000 cr in its books hence there should no negative impact on P&L going forward: Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities

    14:04 (IST)01 Sep 2020
    We believe Bharti Airtel will comfortably pay its AGR dues over 10 years

    We believe Bharti Airtel will comfortably pay its AGR dues over 10 years. It will not be easy for Vodafone Idea to pay dues over 10 years, provided no hike in ARPU is taken from current levels. Reliance Jio has already cleared its AGR dues. The Supreme Court has asked NCLT to decide whether spectrum held by these telcos can be sold under IBC is also seen as positive for Bharti Airtel regarding payment of AGR dues of Aircel and Videocon and also for Reliance Jio for payment of RCom AGR dues: Keshav Lahoti, Associate Equity Analyst, Angel Broking Ltd

    13:46 (IST)01 Sep 2020
    AGR verdict is good news for telecom companies

    The AGR verdict is good news for telecom companies like Bharti Airtel & Vodafone Idea as it allows them breathing space to make staggered payments over a period of 10 years without tremendously disrupting their current cash flows. Bharti Airtel looks very attractive. Closing above 565 levels could lead to 600-615 in the coming days: Abhijeet Ramachandran, Independent Analyst/ Co-Founder and trainer at Tips2trade

    13:38 (IST)01 Sep 2020
    Supreme Court gives telcos 10 years to pay AGR dues; Bharti Airtel jumps 6%, Vodafone Idea tanks 20%

    Bharti Airtel shares jumped 6% to become the top Sensex gainer during Tuesday’s trading session post the Supreme Court’s Adjusted Gross Revenue (AGR) dues judgement. On the other hand, Vodafone-Idea, the other major telecom operator that was eagerly awaiting the verdict, entered free fall as the stock tanked 20% to hit the lower circuit.

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    13:31 (IST)01 Sep 2020
    Expects Bharti Airtel to be able to manage the payment

    Assuming 8% interest rate, Bharti and VIL will now have to pay annually INR39b and INR75b respectively. With zero per cent interest rate, this reduces to INR26b/INR50b respectively. Expect Bharti to be able to manage the payment with an FCF of >INR100b in FY20 with no tariff hike built, while VIL with EBITDA of INR60b and annual payment of >INR250 should find it difficult to manage: Hemang Jani, Head Equity Strategist, Broking & Distribution, Motilal Oswal Financial Services

    13:30 (IST)01 Sep 2020
    Positive for Bharti as liability of Aircel, Videocon will not fall on Airtel

    As per Bharti counsel, the option of review and the curative petition is available with telcos for two things - the inclusion of SUC related charges as the case was only related to the License fee and timelines of payment. Elimination of SUC in the liability could reduce the liability by one third. Positive for Bharti, RIL, as liability of Aircel (INR140b) and Videocon (INR13b) will not fall on Bharti and RCOM (INR310b) will not fall on RJio who have acquired their spectrum: Hemang Jani, Head Equity Strategist, Broking & Distribution, Motilal Oswal Financial Services

    12:37 (IST)01 Sep 2020
    SC verdict positive for Bharti Airtel and RIL

    For the stock market the verdict is mixed. Since it is positive for Bharti and RIL these two heavy weight stocks are likely to remain resilient, supporting the markets. Vodafone’s woes, apart from impacting the stock, will also impact the stocks of banks which have lent to Vodafone: VK Vijaya Kumar, Chief Investment Strategist at Geojit Financial Services

    12:35 (IST)01 Sep 2020
    10-yr time frame puts a question mark on survival of Vodafone Idea

    The SC verdict giving a ten year time frame for payment of AGR dues with 10 percent upfront payment can be regarded as reasonably fair. Since the SC has not said anything about the dues of R Com, Aircel and Videocon, this is certainly very positive for Reliance Jio and Bharti Airtel. However, the 10-year time frame puts a question mark on the survival of Vodafone. Indian telecom industry moving to a virtual duopoly is not a desirable development: VK Vijaya Kumar, Chief Investment Strategist at Geojit Financial Services

    12:33 (IST)01 Sep 2020
    Banks with exposure towards Vodafone Idea corrected

    The Supreme Court ordered telecom companies to pay their AGR dues in 10 years. Telcos have to pay 10 percent of the total pay-out by March 31 and a 10-year timeline for payment of AGR dues will begin from April 1, 2021. Banks with exposure towards Vodafone Idea corrected primarily owing to the street was expecting 15 or 20 years of staggered payment. We could see some pressure in the near term in select Banks with exposure to Vodafone Idea as staggered payment allowed for 10 years instead of company /Government demanded 15/20 years: Jaikishan Parmar, Sr. Equity Research Analyst, Angel Broking Ltd

    12:28 (IST)01 Sep 2020
    We welcome SC decision of granting 10-yr timeline: Airtel counsel Harsh Kaushik

    We welcome the Supreme Court's decision of granting time to telcos to pay the AGR dues. The industry needed this. On other issues, we will examine the judgement: Airtel counsel Harsh Kaushik

    12:25 (IST)01 Sep 2020
    Paying AGR dues over 10 years is positive for Bharti Airtel

    The initial announcements of paying AGR dues over 10 years is positive for telecom stocks like Bharti Airtel and positive for banking stocks who had huge exposure to the telecom sector: Vikas Jain, Senior Research Analyst at Reliance Securities

    12:23 (IST)01 Sep 2020
    RCom shares trade higher; gain 3.7%

    Reliance Communications (RCom) shares gained 3.73 per cent to Rs 2.50 apiece after SC said that NCLAT will decide whether the spectrum of insolvent telecom companies can be sold in insolvency proceedings.

    Check live prices: Reliance Communications

    12:19 (IST)01 Sep 2020
    Vodafone Idea shares tumble 20%

    Vodafone Idea shares tumbled 20 per cent to Rs 8.16 apiece after the Supreme Court allowed 10-year timeline to pay AGR-related dues.

    Check live prices: Vodafone Idea

    12:14 (IST)01 Sep 2020
    Failure to pay installments of AGR dues will incur penalty, interest, contempt of court: SC

    SC cautions telcos, says failure to pay installments of AGR-related dues will incur penalty, interest and contempt of court: PTI

    12:13 (IST)01 Sep 2020
    DoT's demand, its verdict on AGR-related dues are final: SC

    DoT's demand, its verdict on AGR-related dues are final, says SC, asks MDs or CEOs of telcos to give an undertaking for its payment, PTI said in a tweet

    12:10 (IST)01 Sep 2020
    Bharti Airtel top Sensex gainer; jumps over 6%

    Bharti Airtel share price jumped 6.27 per cent to Rs 546.20 apiece after SC allowed 10 years for staggered payment of AGR dues.

    Check live prices: Bharti Airtel

    12:05 (IST)01 Sep 2020
    Companies will be punishable for contempt of court in case of default: Justice Mishra

    The bench headed by Justice Arun Mishra said in the event of default, the company will be punishable for contempt of court. 

    11:55 (IST)01 Sep 2020
    SC declines to decide whether spectrum could be subject to insolvency proceedings

    The Supreme Court declined to decide whether spectrum could be subject to insolvency proceedings and asked NCLAT to decide whether the spectrum of insolvent telecom companies can be sold in insolvency proceedings.

    11:51 (IST)01 Sep 2020
    Yearly intervals by 31st of every year from 2021 to 2031: SC

    The Supreme Court said yearly intervals by 31st of every year from 2021 to 2031. Default interest as per agreement else contempt

    11:49 (IST)01 Sep 2020
    10 per cent payment to be effected immediately: SC

    The Supreme Court said no dispute to be raised no revaluation. A 10 per cent payment to be effected immediately.

    11:46 (IST)01 Sep 2020
    Every year by 7 Feb, payment to be made: SC

    "Payment of annual instalment to become payable, otherwise, contempt proceedings to begin. Every year by 7 Feb, payment to be made," Supreme Court observed.

    11:45 (IST)01 Sep 2020
    MDs, Chairmen of telcos to give an affidavit: SC

    MDs, Chairmen of telcos to give an affidavit. The existing bank guarantee is given to be kept alive, says SC

    11:44 (IST)01 Sep 2020
    Agree with Salve's submission that if spectrum can be part of IBC process: SC

    The Supreme Court said 'agree with Salve's submission that if the spectrum can be part of IBC process'. 

    11:43 (IST)01 Sep 2020
    Tecos to pay AGR dues in 10 yrs; pay 10% of total AGR dues by March: SC

    SC asked NCLT to decide on the spectrum as part of the IBC process. SC said telcos to pay AGR dues in 10 years; 10% of total AGR dues by March

    11:41 (IST)01 Sep 2020
    Bharti Airtel shares gain over 3%; top Sensex gainer

    Bharti Airtel share price among top gainer on BSE in late morning session, just ahead of SC verdict on adjusted gross revenue (AGR) dues.

    check live prices: Bharti Airtel

    11:30 (IST)01 Sep 2020
    SC verdict on AGR dues payment plan shortly

    The Supreme Court verdict on adjusted gross revenue (AGR) dues payment plan expected shortly.

    11:28 (IST)01 Sep 2020
    Bharti Airtel bought Aircel’s spectrum in 2300 MHz band in 2016

    In 2016, Bharti Airtel had bought Aircel’s spectrum in the 2300 MHz band and Videocon’s spectrum in the 1800 Mhz band through trading. On August 21, Bharti Airtel’s counsel Kapil Sibal told the bench that the company has not received any notice from the DoT for payment of additional dues.

    11:26 (IST)01 Sep 2020
    Telecom sector on way to to be a duopoly: Mukesh Ambani’s Jio, Bharti Airtel continue to beat Voda-Idea

    Mukesh Ambani’s Reliance Jio is now not the only one emerging strong on India’s telecom scenario. While RIL’s telecom arm merely just a year back was the only operator to gain market share, Sunil Mittal Bharti’s Airtel is also making a strong comeback with the telecom sector now heading towards becoming a duopoly instead of once feared monopoly.

    Read full story

    11:22 (IST)01 Sep 2020
    RCom AGR dues worth Rs 25,000 crore

    Reliance Communications (RCom) has AGR dues worth Rs 25,000 crore, while that of Aircel is around Rs 12,389 crore.

    11:21 (IST)01 Sep 2020
    Reliance Jio may have to pay for RCom and Airtel for Aircel

    The Supreme Court on August 21, observed that if any telecom operator has acquired spectrum through trading from another operator, then past dues need to be cleared. If the seller of spectrum does not clear the dues then the buyer has to clear them. This not only means that Reliance Jio may have to pay the adjusted gross revenue (AGR) dues of Reliance Communications for the spectrum which it bought from it, but even Bharti Airtel may have to pay a portion of dues of Aircel and Videocon as it bought spectrum in 2300 MHz and 1800 MHz bands from them.

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    11:17 (IST)01 Sep 2020
    Bharti Airtel already paid Rs 18,000 cr to DoT

    Out of Bharti Airtel’s nearly Rs 43,000 crore total dues, the company has paid nearly Rs 18,000 crore to Department of Telecommunications towards the AGR dues.

    11:11 (IST)01 Sep 2020
    HC stays insolvency resolution proceedings against Anil Ambani

    The Delhi High Court Thursday put on hold the insolvency resolution process (IRP) proceedings against Reliance Communications (RCom) then Chairman Anil Ambani in relation to recovery of Rs 1,200 crore loans given by SBI to his two firms. Ambani had given personal guarantees for the Rs 565 crore and Rs 635 crore SBI loans to RCom and Reliance Infratel Ltd (RITL), respectively, in August 2016.

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    11:09 (IST)01 Sep 2020
    SC to give verdict on repayment of AGR dues by telecom companies

    Today the supreme court to give verdict related to repayment of adjusted gross revenue (AGR) dues by telecom companies. The key three-point will be covered are a) time frame for the staggered repayment of AGR dues by telcos b) can spectrum be transferred or sold under IBC and c) Past due of R.comm, Videocon, and Aircel. If the Supreme court allows staggered payment of AGR dues for 15 years what Bharti and Vodafone Idea has requested from the court. Then it will be positive for banks which has exposure to Vodafone Idea. Indusind Bank and IDFC first Bank have the highest exposure in terms of percentage to net worth. Hence any positive outcome will be positive for select bank and clear beneficial would be IDFC first bank and Indusind bank: Jaikishan Parmar, Sr. Equity Research Analyst, Angel Broking Ltd

    11:07 (IST)01 Sep 2020
    Government dues will be wiped out

    In previous SC hearing on AGR, the top court said if the spectrum is subject to the resolution process, government dues will be wiped out. Solicitor General Tushar Mehta said that under trading guidelines all past dues should be cleared prior to spectrum trading.

    10:55 (IST)01 Sep 2020
    Vodafone Idea pays another tranche of AGR dues to government; Rs 7,854 crore paid so far

    Telecom company Vodafone Idea paid Rs 1,000 crore last month to the Department of Telecommunications (DoT) towards the adjusted gross revenue (AGR) dues. This took the total payment amount to Rs 7,854 crore up from Rs 6,854 crore paid by Vodafone Idea earlier in three tranches.

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    10:40 (IST)01 Sep 2020
    SC reserved order on spectrum liability on Aug 24

    On August 24, a bench comprising Justices Arun Mishra, S Abdul Nazeer and M R Shah reserved the verdict on the point as to whether spectrum can be sold by the telecom companies facing proceedings under the Insolvency and Bankruptcy Code (IBC) and how the Adjusted Gross Revenue (AGR)-related dues are to be recovered from them.

    10:28 (IST)01 Sep 2020
    Telcos seek service tax waiver on AGR dues

    Telecom operators’ body COAI has approached the finance ministry seeking waiver of service tax on adjusted gross revenue (AGR) dues to be paid to the government. The telecom operators have been paying service tax and then GST under the reverse charge mechanism (RCM) on licence fees (LF) and spectrum usage charges (SUC) made to the Department of Telecom for the period starting April 1, 2016.

    Read full story

    10:21 (IST)01 Sep 2020
    Vodafone Idea shares jump over 2%

    Vodafone Idea shares were trading at Rs 10.42 apiece, up 2.26 per cent on BSE. The stock quoted day's high of Rs 10.92 and low of Rs 10.29 so far.

    Check live prices: Vodafone Idea

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