Telcos Might Raise Tariffs in Coming Days After Paying AGR Dues

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The Apex legal body Supreme Court ordered all the telcos to pay their AGR dues by 16th March. As per the report of Acuite Ratings and Research limited, settlement of AGR dues will result in operational inefficiency in telecom companies especially Vodafone Idea which will push them to increase their tariffs by 20 or 25 %. On the announcement, Suman Chowdhury, President of Acuite Ratings and Research limited noted that “The orders of supreme court related to the settlement of AGR Dues of telecom companies by 16th March will result in operational inefficiency and sustainability. The ability of Telcos like Vodafone Idea to pay a whopping amount of Rs 55,000 crores by the stipulated date will be uncertain as their current financial situation is not flexible”.

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Telcos Might Increase Tariffs by 20 or 25 %

Airtel needs to pay an amount of Rs 35,500 crores as they have successfully raised funds in the past. Suman Chowdhury also noted that “In order to pay such large AGR dues telcos might increase their tariffs by 20 or 25 % in the near medium term to clear off a massive liability”. All the telecom companies have already deployed the first round of tariff hike in the month of December. Earlier Supreme Court addressed all the telecom companies and instructed them to pay a sizeable amount of their AGR Dues by Friday. As per the report, Vodafone Idea, Airtel and other telecom companies owe a massive amount of Rs 1.47 Lakh crores to DoT. With the effect of Bench’s decision telcos like Vodafone Idea will face trouble as their stock prices went down by 15 % on Bombay Stock Exchange. The supreme court also demanded that DoT must withdraw their executive order related to the recovery of Dues.

Vodafone Idea and Bharti Airtel to Pay their Dues Immediately

After the latest directions from the Supreme Court, Vodafone Idea and Bharti Airtel will have to part pay their AGR dues of Rs 53,000 Crores and 35,500 Crores respectively. Among all the telcos, Airtel will have the least trouble paying their AGR dues as the telco giant has raised 3 billion dollars through a combination of convertible bond offerings and qualified institutional equity placement (QIP). Whereas, Vodafone Idea reported a loss of Rs 6,438.8 crores in the month of October-December 2019 against Rs 5,004.6 crores in the year-ago due to increased finance costs and higher depreciation of assets. Vodafone Idea has strictly marked that their survival will be on stake if no relief granted by the Supreme Court.

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Junior Editor

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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