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The AGR verdict and its impact on Vodafone Idea

Since the Supreme Court has now decided on a 10-year repayment tenure, it would clearly be a big challenge for Vodafone Idea, which is already steeped in debt

Topics
Vodafone Idea | telecom policy | DoT

Sukanya Roy  |  New Delhi 

Well, the row has been on for quite a while and the verdict was much awaited.The in its judgment in the matter of AGR allowed to pay their outstanding dues in 10 years. can pay 10 per cent of their dues by March 31, 2021, and the remaning instalments by February 7 every year.

Listeners might recall that AGR is the basis on which the calculates levies charges payable by operators. Basically, it is a metric calculated from a company's gross revenues and is used to determine the levy that will be imposed on the telecom's income.

The AGR issue is a 14-year-old case that had mobile operators locked in a legal battle with the government over the definition of of the term. While the telecom providers insisted that AGR should only include revenue from core operations and that other sources should be excluded, the (DoT) maintained that AGR also embraced non-core revenue from the sale of assets, interest on deposits, licence fee and spectrum usage charges, rental income and such like.

Today, SC said interest will accrue on any default and non-payment will also invite contempt of court proceedings, said the SC in its verdict. The companies have been ordered to keep their bank guarantees alive till the time the payment is made.

Now, the question that remains is whether can sell spectrum. The SC has left the question to the wisdom of the (NCLT).

So, how much do the telcos owe?

AGR dues as fixed by are Rs 58,200 crore (the highest among all telecom companies). Of this, Vodafone has so far managed to pay only Rs 7,900 crore. According to government estimates, owes Rs 43,780 crore of AGR dues, of which the company has paid Rs 18,004 crore.Tata Teleservices has paid about Rs 4,197 crore and the balance amount due is about Rs 12,601 crore.

For Vodafone Idea, the future course as it has admitted in its results for the June quarter of 2020-21, was closely pegged to today's decision on the issue of tenure of payment of AGR dues. Vodafone Idea, which had earlier sought a 20-year period, had brought it down to 15 years in the last court hearing. Since the has now decided on a 10-year repayment tenure, it would clearly be a big challenge for Vodafone Idea, which is already steeped in debt. The company has to fork out a total of Rs 30,000 crore for AGR dues, deferred spectrum payments, non-spectrum interest, and capital expenditure. Today, tanked as much as 20 per cent while surged 6 per cent post the AGR verdict.

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First Published: Tue, September 01 2020. 14:46 IST
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