Telecom AGR dues: Bharti Airtel, Vodafone Idea, others to move SC seeking more time

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Updated: January 18, 2020 5:49:46 AM

Fresh pleas, likely to be filed by Monday, may also seek staggered payment option with some moratorium.

bharti airtel vodafone. The bulk of the payment are to be made by Bharti Airtel at Rs 35,586 crore and Vodafone Idea at Rs 53,039 crore.

With the Supreme Court rejecting the review plea of telecom operators like Bharti Airtel and Vodafone Idea for waiver of interest, penalty and interest on penalty on their adjusted gross revenue (AGR) dues, the companies are set to file pleas in the apex court seeking more time to pay. Sources said that the pleas, which will be filed by January 20, will also urge the court to allow the department of telecommunications to provide them easier payment terms by way of deferred payment instalments and maybe a two-year moratorium.

These pleas will be in addition to the curative petition, which both Bharti and Vodafone Idea have said they are contemplating to file after the top court’s unfavourable decision on Thursday. However, since chances of any relief by way of curative petition is very dim, as rarely have such petitions provided any relief in the past, the plan is to file pleas seeking extension in timeline to make the payment.

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.

The deadline as of now to make the full payment is January 23 as per the SC order. Telecom operators together need to pay Rs 1.47 lakh crore as dues which are on account of licence fees and spectrum usage charge. The bulk of the payment are to be made by Bharti Airtel at Rs 35,586 crore and Vodafone Idea at Rs 53,039 crore.

Though Bharti Airtel is better placed than Vodafone Idea with regard to making the payment as it has just concluded raising $3 billion via qualified institutional placement and foreign currency convertible bonds, any extension in timeline and provision to pay in deferred instalments over a long period, will provide it a cash flow relief.

“With no relief on dues from SC, we expect either the SC or the government to provide relief in terms of payment options (our base case). This is as even with recent price hikes and spectrum moratorium Voda-Idea will face challenges to pay the AGR dues. We expect a moratorium on AGR dues for two years and staggered payments post that over a period of time, aiding cash flows. This will be similar to the spectrum dues,” Jefferies said in its report.

“We do not have a view on whether the government will intervene and offer some relief in the form of a waiver and/or staggered payment. Telcos are likely to seek intervention, of course. The government’s interventions and comments in the past couple of months did drive a view in certain sections of the Street that it is keen on ensuring that the current industry structure sustains. We are generally wary of second guessing the government,” Kotak Institutional Equities said in its report on Friday. It added: “From the government perspective, it needs to consider the serious ramifications of further consolidation in the sector, including loss of revenues for itself, banking sector NPAs and a temporary-but-severe inconvenience to consumers.”

The weak financial position of Vodafone Idea to pay the AGR dues which may lead to its closure 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 the government by way of deferred spectrum instalment of Rs 1,57,750 crore (it needs to pay this by 2031 in instalments), and Rs 5,712 crore as the one-time spectrum charge (under litigation). The company’s total exposure to banks is of Rs 49,466.43 crore.

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