Vodafone Idea Likely to Survive if Government Allows to Pay AGR Dues Over 15 Years

Vodafone Idea has just cleared their self-assessed principal amount of Rs 6,854 crore from the massive amount of Rs 58,254 crore

Highlights
  • Vodafone Idea will have to pay Rs 5,200 crore in annual AGR pay
  • The government will face trouble as Vodafone Idea owes Rs 1.3 lakh crore
  • Government is planning to reduce license fees along with spectrum usage charge

Vodafone Idea is facing massive financial distress as the telco giant has to pay Rs 58,254 crore towards AGR dues to the government. However, the Supreme Court might allow the deferred payment mechanism, which would allow the stressed telco to clear their AGR dues in a period of 15 or 20 years. However, as per the analysts, the telco giant might lose its financial credibility as they will have to pay approximately Rs 5,200 crore in the annual pay. Similarly, Bharti Airtel will also face distress as the self-assessed AGR dues of the telco giant is approximately three times lower than DoT.

Government Will Face Trouble if Vodafone Idea Exits

The analysts also marked that the government will face financial distress if Vodafone Idea shuts down as the telco approximately owes a massive debt of Rs 1.3 lakh crore. Even if Vodafone Idea survived the AGR crisis, the telecom operator would have to increase their Average ARPU by approximately 40%.

Not only this, to directly compete with Reliance Jio and Bharti Airtel, but Vodafone Idea will also have to invest roughly $ 1.15 billion annually to expand their 4G network operations. Sanjay Kapoor, who is the ex-CEO of Bharti Airtel marked that Bharti Airtel will clear AGR dues as its balance sheet allows it. However, Vodafone Idea will face trouble clearing off their AGR dues as the amount if three times more than Bharti Airtel.

Telcos Appeal Government for Relief Measures

Vodafone Idea appealed the government to provide relief measures as it would help the telco giant to survive the cash-crunch situation. The government is planning to give GST refunds of Rs 8,000 crore to telco giant and settle it towards AGR dues. Not only this, but the government is also planning to reduce the license fees along with spectrum usage charge (SUC).

As after the Supreme Court verdict, Vodafone Idea has to pay Rs 58,254 crore towards AGR dues. Whereas, Bharti Airtel has to pay Rs 43,980 crore towards AGR dues. However, Vodafone Idea has just cleared its self-assessed principal amount of Rs 6,854 crore, and Bharti Airtel has cleared its self-assessed AGR amount of Rs 18,004 crore.

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