The Department of Telecommunications (DoT) is asking telecom operators Bharti Airtel and Vodafone Idea to make some payment towards AGR dues before being allowed to defer the rest of the dues over 20 years. As reported by ET Telecom, telco giants Bharti Airtel and Vodafone Idea have already stated that they cannot pay statutory dues immediately apart from what they have already paid. Both the telcos and Department of Telecommunications have to submit a blueprint to supreme court regarding the payment of AGR dues at the next hearing which is scheduled on July 20, 2020.
Deferred Payment Mechanism for AGR Dues is the Last Hope of Telecom Operators
The AGR issue has been ongoing between telcos and government from the past 16 years. The supreme court strictly directed all the telcos back in 2019 to pay their AGR dues. Also, the supreme bench widened the definition of AGR and included non-core items while calculating the total due amount. However, the decision of the supreme bench left 16 telcos with massive AGR dues. In total, all the telecom operators have to pay Rs 1.7 lakh crore to the government towards AGR dues.
Among all the telcos, Vodafone Idea and Bharti Airtel were the worst hit. Vodafone Idea and Bharti Airtel have to pay Rs 58,254 crore and Rs 43,980 crore respectively towards AGR dues. However, the telcos are already under heavy financial distress, and deferred payment mechanism for AGR dues, if accepted by the supreme court will aid the telecom operators and ensure growth in the telecom industry.
Vodafone Idea does Not Have Enough Cash to Meet Operating Expenses
Vodafone Idea has been facing massive financial distress due to AGR issue. The legal counsel of the telco earlier stated that Vodafone Idea is under heavy financial distress, and it cannot secure bank guarantees. Also, the telco is facing trouble in paying salary to its employees and meet operating expenses. If the deferred payment mechanism for AGR dues will not be allowed by the supreme court, the future of the telco will be on stake. Currently, Vodafone Idea has just cleared Rs 6,854 crore towards AGR dues whereas Bharti Airtel has just cleared 18,004 crores.