Bharti Airtel and Vodafone Idea Might Tender Spectrum and Tangible Assets as Security for AGR Dues

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Telecom operators Bharti Airtel and Vodafone Idea might tender their spectrum and tangible assets and tax refunds as security to the Supreme Court. As Supreme Court earlier directed all the telcos to file an affidavit till June 18 regarding payment of AGR dues, telecom operators are considering that spectrum and tangible assets will be viable as securities. As reported by ET Telecom, telecom operators have sufficient assets which will be enough to provide for security against deferred payment of AGR dues over 20 years. It is expected that the spectrum and tangible assets as security will protect future AGR payments, which will be made to the government.

Bharti Airtel in Better Position to Provide Bank Guarantees

Bharti Airtel has recently raised a whopping amount of $3 billion through the sale of convertible bonds and rights issue. Equity research firm SBICAP securities also state that Bharti Airtel is in a better position to pay its outstanding dues. The firm also added that deferred AGR payment would help Bharti Airtel to extensively grow and invest in the network, focus on market share and take care of regulatory dues.

Vodafone Idea is Under Huge Financial Distress

As the supreme court asked the telcos including Vodafone Idea, to provide an affidavit regarding payment of AGR dues, Mukul Rohatgi who represented the telco stated that Vodafone Idea could not secure bank guarantees at this period. The telco is facing massive financial distress, and it is facing difficulty in paying employees salary and meeting operating expenses. As per industry estimates, Vodafone Idea has net debt of Rs 1.1 lakh crore. Also, as stated by SBICAP securities, the spectrum liabilities of Vodafone Idea stand at Rs $11.7 billion.

Bharti Airtel has to Pay Rs 43,980 Crore Towards AGR Dues

The government, in order to provide relief to stressed telcos, is considering a package which would provide a sovereign guarantee of 15 % AGR dues in case if telecom operators knock the doors of public sector bank for a loan. As per DoT estimates, Bharti Airtel has to pay Rs 43,980 dues whereas Vodafone Idea has to pay a whopping amount of Rs 58,254 crore. From the massive chunk, Airtel has cleared Rs 13,004 crore, and an additional amount of Rs 5,000 crore whereas Vodafone Idea has cleared Rs 6,854 crore towards AGR dues.

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