Telecom stocks end in red amid uncertainty over statutory dues

Shares of Vodafone Idea and Bharti Airtel closed marginally lower on Monday even as investors kept their fingers crossed amid uncertainty over statutory dues.

State-owned MTNL was 8.14 per cent down over the previous close of Rs 9.35 on the BSE.

Vodafone Idea's shares closed 0.58 per cent down to Rs 3.42 per unit. Intra-day, the stock gained as much as 18.89 per cent to hit upper circuit at Rs 3.78.

The stock lost all its early gains after the Supreme Court rejected Vodafone Idea's proposal to pay Rs 2,500 crore by the end of Monday, and Rs 1,000 crore by Friday against adjusted gross revenue (AGR) dues.

However, after market hours, Vodafone Idea and Tata group have made part payments of about Rs 2,500 crore and over Rs 2,190 crore, respectively, to the telecom department towards statutory dues, a government official said.

Bharti Airtel's stock settled 0.02 lower at Rs 565.

Reliance Industries, parent of Reliance Jio Infocomm, settled marginally down by 0.55 per cent to Rs 1,478.40 on the BSE.

However, Tata Teleservices (Maharashtra) Ltd gained 9.45 per cent to close the day at Rs 3.59. It hit upper price band at Rs 3.60, up 9.75 per cent, during the day.

Analysts said the SC ruling came as a negative for the telecom companies.

"The telecom sector has probably seen its low and the tariff structure has been revised upwards by about 40 per cent which was a major positive. However, the payment of adjusted gross revenue (AGR) of telecom companies and no leeway provided in terms of payment is a major negative," Paras Bothra, president of equity research, Ashika Stock Broking, said.

The Supreme Court on February 14 dismissed telecom companies' modification petition with respect to the AGR liabilities while asking them to pay before the next hearing on March 17.

Bothra also said this will essentially force a duopoly kind of industry without the government intervention and is against consumer interests.

Bharti Airtel, Vodafone Idea and Tata Teleservices are jointly liable to pay dues of over Rs 1 lakh crore but they have informed the Department of Telecommunications (DoT) of making only partial payment, according to their representatives.

Bharti Airtel on Monday said it has paid Rs 10,000 crore to the DoT towards statutory dues.

"The...amount of Rs 10,000 crore has been paid on behalf of Bharti Airtel, Bharti Hexacom, and Telenor," the Sunil Mittal-led company said in a letter to the DoT earlier on Monday.

State-owned BSNL and MTNL have also not paid the dues.

Reliance Jio on January 23 paid Rs 195 crore to the DoT to clear all AGR dues accounted till January 31, 2020.