Brickwork Ratings downgrades Vodafone Idea NCDs

Brickwork Ratings has downgraded Vodafone Idea's rating on non-convertible debentures (NCDs) citing the recent Supreme Court ruling on adjusted gross revenue (AGR) and extension of timeline with regard to the sale of stake in Indus Tower to Bharti Infratel.

The rating agency has downgraded Vodafone Idea from A plus with negative outlook to A minus watch with negative implications.

Brickwork's downgrade follows similar action by Care, India Ratings and Crisil on the telecom major's long-term issuer ratings on NCDs worth Rs 3,500 crore.

The Supreme Court last month upheld the government's position on including revenue from non-telecommunication businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

Vodafone Idea, Airtel and other telecom operators may have to pay the government a whopping Rs 1.4 lakh crore following the recent Supreme Court order that sent shock waves through an industry already grappling with billions of dollars in debt and an intense tariff war to retain customers.

According to the telecom department's calculations, Bharti Airtel faces a liability of around Rs 42,000 crore after including licence fees and spectrum usage charges, while Vodafone Idea may have to pay about Rs 40,000 crore. Jio may have to pay around Rs 14 crore.

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