In a major setback to Vodafone Idea (Vi) and Bharti Airtel along with some other companies, the Supreme Court has quashed the curative plea made by the telecom operators for recalculation of AGR (adjusted gross revenue) dues. The telcos were seeking the recalculation because as per them, the telecom department had made arithmetical errors while coming up with the amount. The development has been first reported by CNBC-TV18.
Vodafone Idea and Bharti Airtel were very much eager to get the amount recalculated as it would have meant major relief. Now Vodafone Idea would be under huge pressure to pay off annual statutory dues from next year as the deferment period ends.
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Had the SC sided with the plea made by the telcos, Vi's AGR dues could have been reduced by half and could have further reduced the company's annual payouts by Rs 6500 crore. However, since that has not happened, all the eyes would be on the government if an extension to the moratorium period is provided.
At the time of writing this, Vi's share price has dipped 15.81% to Rs 10.86 while Bharti Airtel's share price touched a lifetime high of Rs 1680. Goldman Sachs has put a target price of Rs 2.5 for Vi's stock. Vi's share price has fallen about 30% in the last month. The telco is currently in the process of raising funds via debt and is already in talks with the lenders.
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Some reports even suggested that Vi is in talks with non-banking finance companies (NBFCs) to raise funds. The telco needs these funds to fuel operational expenses, upgrade the network infrastructure, and also pay off the dues. As Vi is losing customers regularly, the effect of tariff hikes has stayed flat on the overall revenues in the past.
