The Indian telecom operators have received a positive development from the Supreme Court (SC). In an order, the apex court has said that telcos can claim credit for duties paid on parts such as green shelters and tower components. This is a relief for the telcos as previously, the Bombay High Court had said that these items are non-capital goods, and thus, companies can't get cenvat credit against the duties paid, said an ET report.
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Indian companies in the telecom sector including Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi) are set to benefit from this decision. Other companies such as Indus Towers, Reliance Communications, and Tata Teleservices will also benefit from this. It will remove the financial burden from infrastructure-related expenses for the telcos.
Telecom operators couldn't get their curative petition to make any sort of impact at the Supreme Court for the adjusted gross revenue (AGR) dues recalculation. While this decision wouldn't create a very big impact, it will bring some levels of relief for the telcos. The telcos also recently hiked the tariffs of mobile plans for customers across India. That has also helped them improve their financial situation with higher levels of revenues, and a better average revenue per user (ARPU) figure.
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The decision from the Supreme Court is also likely to boost the morale of the infrastructure providers. That will help in scaling telecom and connectivity infrastructure across the country at a faster pace. The telecom operators will welcome this decision from the Supreme Court with open hands, and it will be interesting to see how much of a difference it creates in their margins in the coming quarters.
