Telecom operators and non-telecom PSUs together now need to pay over Rs 4-lakh-crore dues within a week.
Telecom operators like Bharti Airtel and Vodafone Idea on Thursday received a huge setback with the Supreme Court rejecting their limited review petition seeking waiver of interest, penalty, and interest on penalty on their adjusted gross revenue (AGR) payment.
Of the total Rs 1.47 lakh crore of AGR dues which the telecom operators are required to pay by January 23 as a result of the apex court’s October 24, 2019, order, nearly 75% comprises interest, penalty and interest on penalty.
Though Bharti Airtel and Vodafone Idea expressed their disappointment and stated that they are evaluating filing a curative petition, chances of any relief is very dim as rarely have curative petitions provided any relief in the past. While review petitions are heard by the same bench which passed the original judgment unless a judge has retired, curative petitions are heard by five-senior most judges led by the Chief Justice, including the judges who gave the original judgment.
Since the deadline to pay is only a week away, some lawyers said that the companies may approach the SC seeking more time to pay and ask for a deferred instalment payment scheme on the lines of payment for spectrum bought in auctions.
Despite the setback, Bharti Airtel is still better placed as it has just completed a fund raise of $3 billion through qualified institutional placement (QIP) and foreign currency convertible bonds (FCCBs). Bharti needs to pay Rs 35,586 crore.
It is Vodafone Idea which is almost certain to down shutters now as its chairman Kumar Mangalam Birla had said this categorically on December 6, 2019.
Closure is also certain because with only a week remaining to pay the dues, the company, which needs to pay Rs 53,039 crore, has not undertaken any fundraising exercise.
Apart from the telcos, even the non-telecom public sector undertakings (PSUs), which together need to pay over Rs 3 lakh crore, would now need to pay up by January 23. This would be a headache for the government as these PSUs have so far not done anything to raise funds to make the payments.
The closure of Vodafone Idea would not only leave the country’s financially stressed telecom sector with only two private players but also be a setback for the government and banks as they would have to take a huge hit. Apart from AGR dues of Rs 53,039 crore, Vodafone Idea owes government by way of deferred spectrum instalment Rs 1,57,750 crore (it needs to pay this by 2031 in instalments), and Rs 5,712 crore as a one-time spectrum charge (under litigation). The company’s total exposure to banks is Rs 49,466.43 crore.
On December 6, speaking at a conference in the Capital, Birla had categorically said that the company will shut shop if the government does not provide relief on the payment of dues arising out of AGR. “If we are not getting anything then I think it is end of story for Vodafone Idea. It does not make sense to put good money after bad. That would be end of story for us. We will shut shop,” he had said in a response when asked if Vodafone Idea will put in more money.
Of the overall Rs 1.47 lakh crore which the telecom industry needs to pay up, the licence fee dues stand at Rs 92,642 crore while spectrum usage charge is at Rs 55,054 crore.
Of the total licence fee dues demand of Rs 21,682 crore raised on Bharti Airtel, interest, penalty and interest on penalty comprise Rs 16,152 crore. Similarly, for Vodafone Idea, of the total licence fee dues of `28,309 crore, `21,435 crore is on account of interest, penalty and interest on penalty.
Since the order to pay the amount came from the Supreme Court, the government has so far been unwilling to provide any relief to the telecom operators.
The operators had urged for a relief keeping in context the overall financial hardship being faced by the industry. Vodafone Idea and Bharti Airtel together posted a loss of around `74,000 crore in the July-September quarter due to provisioning for the AGR-related dues.