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Given the Government’s stated objective of ensuring three viable private telecom operators, as much as 50-75 per cent of AGR dues of Vodafone Idea could get cancelled, according to a new report by UBS
“Looking at the details of curative petition filed by telcos on the AGR case, we believe as much as 50-75% of AGR dues could potentially be cancelled for VIL,” the brokerage firm said.
“The Government has, on multiple occasions, stated a desire to keep three viable private mobile players in India. While the announcement in Q3 FY21 allowing telecom operators to defer spectrum and AGR related payments was in our view a step in the right direction, we believe more measures especially on AGR payments could be taken as the moratorium comes to an end. We look at various scenarios around the telcos’ dues to the Government, and believe as much as 50-75 per cent of the AGR dues could potentially be waived or converted into equity,” it added.
In October 2023, the Supreme Court accepted the curative petition from Bharti Airtel and VIL which focuses on two key points: The telcos claim that the penalty and interest charges should be waived since previous decisions in the TDSAT panel were in favour of the telcos before the final adverse Supreme Court judgment and hence the telcos are not liable for penalty; and secondly, Both operators claim arithmetic errors in DoT’s calculations of license fees.
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The original demand under the AGR case was ₹63,000 crore for Bharti Airtel (including liabilities on acquired spectrum from Tata, Telenor etc) and for VIL was ₹58,000 crore.
Out of these, Airtel has paid ₹18,000 crore while VIL has paid ₹8000 crore. “Further more, based on our understanding with operators, roughly 75 per cent of the total AGR due was attributable to penalty and interest on penalty and if we were to assume the calculation errors suggested by telcos are accepted, the liabilities could reduce further by ₹35000-36000 crore for VIL (50 per cent of the outstanding in its books) and ₹20000 crore for Airtel (assuming a similar proportion of its outstanding liability). Indeed, if the Supreme Court agrees to both the requests of the telcos, the final liability for Airtel would become almost negligible, whereas VIL’s remaining liability would also decline by 40-50 per cent,” UBS said.
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