Bharti Airtel and Vodafone Idea Can Reduce Debt and Save More if AGR Assessment Approved by SC

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Both Bharti Airtel and Vodafone Idea (Vi) stand a chance to reduce their debt significantly and increase annual savings if the Supreme Court (SC) allows the reassessment of AGR dues. The telcos have appealed at SC about the arithmetical errors the Department of Telecommunications (DoT) has committed while calculating the dues. As per their assessment, they have to pay much lesser than the amount DoT has come up with. The operators have filed a petition saying that DoT didn’t take into account the double-counting of monthly interest and penalties in the total AGR dues amount which needs to be corrected — more details on the story ahead.

Airtel Can Save Rs 4,100 Crore, and Vi Can Save Rs 5,800 Crore Annually if Dues Reassessed

Via a BusinessToday report, Vodafone Idea stands a chance to save up to Rs 5,800 crore, and Bharti Airtel stands to save Rs 4,100 crore annually if the SC allows for the reassessment of the dues calculated by DoT.

Not only this, but the net debt of the telcos is also expected to go down significantly. Airtel could reduce debt by up to 30%, and Vodafone Idea can reduce it by 20% respectively. However, the analysts believe that even after a major respite for Vi, the telco would generate negative Free Cash Flow (FCF).

Last year in September, the Supreme Court had asked the telcos to clear their AGR dues in 10 annual instalments by paying a 10% advance on the total dues left before March 31, 2021. Vodafone Idea has already paid Rs 7,850 crore out of its total dues of Rs 58,254 crore and Airtel has paid Rs 18,000 crore out of its total dues of Rs 43,980 crore.

It is worth noting that the Supreme Court bench led by now-retired judge Arun Mishra said that no further assessment of the dues would be entertained by the apex court and the dues calculated by DoT will be taken into account. Thus it will be interesting to see how the SC reacts to the petition filed by the operators disregarding its direct order about not interfering with the assessment of dues any further.

According to Vodafone Idea’s self-assessment, its dues should be Rs 21,500 crore which is 63% lesser than what DoT has calculated while Airtel’s self-assessment said that its dues should be just Rs 13,000 crore which is 70% lesser than DoT’s assessment.

It is not just Airtel and Vodafone Idea, but also Tata Teleservices (TTSL) which believes that the dues calculated by DoT are not accurate and the telco has also filed a petition for the same at the SC

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