Analysts Expect Telecom Industry Tariff Hikes to be Imminent

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Bharti Airtel, the second largest telecom operator in India is expected to manage its AGR payment dues with no tariff hikes, Motilal Oswal, an Indian diversified financial services firm said in a research report. The firm’s report released on Tuesday reflects the Supreme Court verdict on the adjusted gross revenue (AGR) case. The apex court on Tuesday allowed a 10-year repayment period for the AGR liability with the operators required to pay 10% total dues as upfront payment by March 31, 2021. Motilal Oswal in its report said that the “silver lining” for the telecom operators is that the Supreme Court did not pass “adverse verdict for the insolvent” operators. The apex court left it to the National Company Law Tribunal (NCLT) to make a decision on the insolvent operators who sold a part of the spectrum to Reliance Jio and Airtel.

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Vodafone Requires “Sizeable Price and Capital Infusion” to Secure its Long-Term Future

Motilal Oswal said that Airtel would have to pay Rs 4500 crores by March 31, 2021 and Rs 3400 crores annually for the next 10 years. Further, it was said that Vodafone Idea would have to shell out Rs 5800 crores by March 31, 2021 and Rs 6600 crore annually for the next 10 years.

The firm in its report said that Vodafone Idea is in a “precarious situation” following the AGR verdict with its net debt touching Rs 150,000 crore. Motilal Oswal said that Vodafone Idea “could manage the current fiscal” with payments from multiple parties including Vodafone Group and Bharti Infratel. It has to be noted that Bharti Infratel on Tuesday said that it is moving ahead with the completion of the merger between Indus and Infratel. The development would result in Vodafone Idea selling its 11.15% stake in Indus Towers for approximately Rs 4000 crores.