Vodafone Idea Ltd (VIL) has a cash balance of just $1.8 billion against its Adjusted Gross Revenue (AGR) liability of $6.3 billion, while that of Bharti Airtel is at $5.3 billion against a total liability of $5 billion.

“VIL has a gross cash balance of $1.8 billion as December 2019, with spectrum dues of about $450 million payable in March, leaving the company with a headroom to pay slightly above $1 billion to the Department of Telecommunications (DoT) for AGR liability (about 20 per cent of total due) per our estimate,” according to a report by Goldman Sachs.

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Vodafone Idea’s revenue market share could see a sharp decline in the coming quarters in a case of no government relief, the said, adding, VIL’s press release indicates that the Supreme Court could still hear its plea for modification of AGR payment terms at next date of hearing on March 17.

Bharti Airtel will deposit Rs 10,000 crore ($1.4 billion) or 28 per cent of the total liability amount by February 20, and the company is confident it can make the balance payment before the next date for court hearing.

Post its recent capital raise, Bharti Airtel has $5.3 billion of cash on its books (excluding Africa and Infratel), against a total liability of $5 billion.

According to Jefferies, following the Supreme Court’s ruling on AGR dues, options are limited for VIL.

“We expect it (VIL) to ask the Supreme Court in March for relief given its financial position. In case there is no relief we see solvency challenges for VIL and it will likely go into National Company Law Tribunal (NCLT),” it said in a research note.

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According to UBS, relief could also come by means of an executive or cabinet intervention, but so far the Government has preferred the legal channels to take precedence.

“While the legal avenues available are now increasingly limited, we believe that the telcos may still opt for a curative petition. However, the history of curative petitions is not encouraging and larger, national interests will have to be cited for the petition to be accepted,” UBS said.

According to Citi Research, while some green shoots were visible for VIL in third quarter ended December 2019, its situation remains “extremely precarious”.

“The company has admitted that its ability to continue as a going concern remains at risk in the absence of relief on its $6 billion AGR liability. While some green shoots were visible in 3Q (2 per cent growth in qoq revenue, 4G sub adds accelerated, tariff hike benefits to be visible from 4Q), this could come to naught without any relief,” it added.

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