Vodafone Idea and Other Telcos Might Only Have to Pay Principal for AGR Dues

A large part of the controversial AGR dues are made up by the interests, penalties and the penalties on the interests for the telecom operators

Highlights
  • With interests and penalties, Vodafone Idea has to pay Rs 53,000 crore
  • Bharti Airtel has to pay Rs 35,500 crore to the DoT
  • Now, in total the telcos might only have to pay Rs 170 billion

In a new sigh of relief for the telecom companies, analysts have come out saying that the government might only ask for the principal amount from the telecom operators in the case of Adjusted Gross Revenue (AGR) dues. The report comes from ET Telecom. According to an Axis Capital note, the budgetary estimates of the government come out to be Rs 1,330 billion which can be a great relief for the telecom companies. It is entirely possible that the government might not ask for the penalties, interests and the interests on the penalties from the telecom companies. It is worth noting that these penalties and interests were the constituents of the dues which were making up for more than 75% of the total due payments. If these are foregone by the government, then it would be a significant relief to the telecom companies.

vodafone-idea-telcos-principal-agr-dues

Axis Capital Estimates Principle Quantum of Dues

Axis Capital said in its note, “Of Rs 590 billion expected in FY20, assuming Rs 210 billion in license/SUC and Rs 210 billion spectrum-related payment, the AGR liability collection works out to Rs 170 billion (Voda-Idea’s Rs 100 billion, Bharti Airtel’s Rs 87 billion) – the principle portion only.”

The analysts also said that if the decision is likewise then it would be a positive sign for Vodafone Idea and it would remove the doubts of the telecom on its ability to continue as going concern. The matter currently stands as sub-judice and the Supreme Court will be hearing the modification petition soon on the matter. It is worth noting that the telecom companies have filed the modification petition asking the Supreme Court to let the telcos negotiate with the DoT directly regarding the timeline of the payment. If that happens, then the telcos might get an easier payment deadline.

Big Relief Underway for Vodafone Idea

Currently, with the interests and penalties, the total dues for Vodafone Idea come out to be Rs 53,000 crore, and for Bharti Airtel, they come out to be Rs 35,500 crore. However, as per Axis Capital, the total payments which DoT might be seeking could be Rs 170 billion, which appears to be the principal amount only.

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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